M. Novak on liberal trembling over upcoming encyclical

From the site of First Things, Michael Novak has a comment about the anticipation felt by liberals over the Holy Father’s upcoming encyclical.

My emphases and comments.

Economic Heresies of the LeftJun 29, 2009Michael Novak

What exactly is in Benedict XVI’s new encyclical on the economy and labor issues is not yet known. Catholic leftists and progressives, though, are already trembling with excitement. Three glaring errors have already appeared in these heavily panting anticipations.

An accurate presentation of real existing capitalism requires at least three modest affirmations:1) Markets work well only within a system of law, and only according to well-marked-out rules of the game; unregulated markets are a figment of imagination.

2) In actual capitalist practice, the love of creativity, invention, and groundbreaking enterprise are far more powerful than motives of greed.

3) The fundamental systemic motive infusing the spirit of capitalism is the imperative to liberate the world’s poor from the premodern ubiquity of grinding poverty. This motive lay at the heart of Adam Smith’s important victory over Thomas Malthus concerning the coming affluence—rather than starvation—of the poor.

Since the origins of modern capitalism around 1780, more than two-thirds of the world’s population has moved out of poverty. In China and India alone, more than 500 million have been raised out of poverty just in the last forty years. In almost every nation the average age of mortality has risen dramatically, causing populations to expand accordingly. Health in almost every dimension has been improved, and literacy has been carried to remote places it never reached before.

Whatever the motives of individuals, the system has improved the plight of the poor as none ever has before. The contemporary left systematically refuses to face these undeniable facts.

Fr. Thomas Reese, S.J., one of our most reliable leftist bellwethers, [how one tires of him] has recently opined that Benedict XVI’s new encyclical will cry out for more regulation, rather than unregulated markets. Further, the pope will denounce greed and cry out for more attention to the urgent need to aid the world’s poor. [Woiw… the Pope an advocate for the poor. Such insight.]

Reese thinks these are anticapitalist positions. That is ridiculous. They lie at the heart of why capitalism has worked as well as it has to liberate the poor—first in the United States and Europe, then in one continent after another, as it is now doing in almost all areas of Asia.

Fr. Reese says that the pope will blame the greed of U.S. bankers for the current global financial crisis. [What do you want to bet that the Pope won’t get so specific. It is Reese himself who is pushing his agenda into a fantasy about the Pope’s encyclical.] While many institutions, including banks, failed in their basic duties, government action was the principal villain in the 2009 debacle. It was the federal government that forced banks to make sub-prime loans to poor families (who were known to be unable to pay their mortgages on a regular basis). It threatened banks that did not invest in poisonous packages of mortgages, vitiated by the bad ones.

The federal government even guaranteed the work of two huge quasigovernment mortgage companies—Fanny Mae and Freddy Mac—that wrote more than half of all mortgages during the fateful years. Of course, when the house of cards fell, government was not there to make good on its guarantees—or even to accept responsibility for its own heavy-handed actions.

For at least ten years before the disaster finally occurred, my colleagues at the American Enterprise Institute had been warning of the government abuses that were heading toward this calamity. Partisans of big government refused to listen.

For moralists, it is essential to see how often (not always) government itself sins grievously against the common good, out of a lust for power and domination over others. Furthermore, government often (not always) generates foolish and destructive regulations, and often dispenses justice that winks rather than justice that is blind. [Wait until we see more and more federal judges with "empathy".]Government is more frequently the agent of injuring the common good than the ordinary lawful actions of free citizens. During the twentieth century, governments too often destroyed the common good of their citizens for years to come.

In the United States, the existing code of federal regulations for businesses is enormous. Title 12 covering “Banks and Banking” runs to 4,786 pages; Title 15 on “commerce and Foreign Trade” is 1,941 pages; Title 16 on “Commercial Practices,” 1,600 pages; Title 17 on the “Securities and Exchange Commission,” 2,708 pages; and Title 31 on “Money and Finance: Treasury,” 1,917 pages.

The total number of pages in this code is 12,592. Laid out end to end, the volumes of the code extend for 2.35 miles. If you count the pages in feet (30 inches per linear foot is the standard measure) the code runs for six linear miles.

An unregulated market indeed! The real world of American capitalism is more like Gulliver bound down by thousands of threads. Many of the regulations are out of date, obsolete, costly, destructive, and—in their actual effects—counter to the very intentions that gave them birth. But regulation there is, and regulation there must be. Without rules, American capitalism cannot function.

As for greed, Max Weber pointed out that greed is present in every age and every system of human history. [Darn Adam anyway!] Yet greed was rather more socially central in ancient times than today, and played a much more decisive role. And nowadays, greed flourishes most wherever government power is concentrated.

By contrast, in enterprise societies such as the United States, it is possible to become rich—even very rich—by methods that focus on innovation rather than greed. The great universities of the Middle West and Far West, were founded expressly to give spur to new inventions in mining, agriculture, and other technical fields. Texas A & M, Iowa State, Wisconsin State, Oklahoma State, and scores of others have been the hothouses of ideas in agriculture, engineering and electronics, geology, mining and drilling—ideas rendered practical by the makers of many fortunes. They have mightily served the common good of Americans and the entire human race.

As John Paul II wisely commented in Centesimus Annus, practical knowledge is the main cause of wealth today. Ideas rather than great landholdings are the main form of wealth in our time. As both Caesar and Cicero long ago observed, although it seems as though community ownership ought to serve the common good best, in practice private property does. The right to private property has long been justified by virtue of its superior service to the common good. [Beware of those who speak badly about "self-interest" and do not specify that what they mean.]

And in the United States, scores of entrepreneurs are ready to risk losing everything they have in order to create something new, create something that will make life better for their fellow men. Henry Ford failed repeatedly in several businesses before he finally made the Ford Motor Company the great model for business that it once was. (It was the first establishment in history to pay its laborers a handsome wage of five dollars per day. At the time, ordinary lawyers averaged about $1500 per year. Ford’s motives, of course, were not altruistic; he wanted his workers to purchase the cars they helped build.) [A kind of "self-interest" which includes and expands benefits for others.]

As Oscar Handlin once noted, almost every industrialist who built a new railroad North and South in the United States in the nineteenth century prospered. Nearly every tycoon who tried to build an East–West railroad lost money. What spurred men to keep trying had less to do with greed that with the sheer romance of conquering the deserts and the Rockies. The element of romance in business is simply not grasped by dialectical materialists. [Interesting observation.]

In brief, nearly all the leftish critiques of American and other forms of capitalism are empirically false. They do not fit the actual facts. [Liberals will always ask you to deny the evidence of your senses and of common sense. They don’t like facts or distinctions and will accuse you of being uncivil if you counter their positions with reason and facts.] But these three—greed, unregulated markets, and the idea that capitalism makes the poor of the world worse off—are especially tiresome, and very far from reality.

Will all those good Catholic leftists who announce their own enthusiastic preference for the poor actually help to liberate the poor, even by a little? Will their anticapitalist policies help alleviate poverty? The historical record offers very little evidence for that contention.

And yet wherever a healthy, inventive capitalism goes, the poor soon rise by the millions out of poverty, come to better physical health, and advance into higher education.

You can look up the record.

Michael Novak, a member of the editorial board of First Things, holds the George Frederick Jewett Chair in Religion and Public Policy at the American Enterprise Institute. His most recent book is No One Sees God (Doubleday, 2008).

As a Catholic businessman, father, husband and friend: I have limited time, energy, wealth, etc.

The pricing system sends me infinite amounts of information that allows me to best coordinate my choices on how to use my time, energy, wealth, etc.

Part of this time is spent at my job and investing my own wealth.

The stock market lets me use my idle and excess money to support worthy businesses- businesses which provide essential services and goods that enrich the lives of other.

The return on these investments gives me more money for my material choices of giving to charity, paying to send my children to Catholic schools, supporting my parish, buying books to enrich my own faith, etc.

I also have more leisure time, which I use to attend Mass, to pray, to talk with my children, etc.

Novak is living in a dream world, just as much as the communists and socialists. The current crisis was not brought on by the sub-prime mortgage lending scandal. Did that play a small role … yes, but that was not the main factor. Novak talks a good game, but so do the communists, and if it is was not for original sin both systems could probably work. But unfortunately man has a fallen nature, and indeed is motivated by greed, and self interest that will take the priority over the common good. Businesses emerge everyday with the goal of taking market share from another company, and putting others out of business, but no this is not greed. Read any capitalist about running a business and they will advocate only one goal of the business and that is maximizing profits. Anything legal (not necessarily moral) that does that must be done. When what you do hurts others, remember this is business not personal. And if people are just motivated by the entrepreneurial spirit, why, once the get an advantage, do they work so hard to rig the system in their favor. This man is an ideologue, that has no interest in listening to Church. I sure that after the encyclical is released, he will go to Rome and have a conference undermining the encyclical and pointing out why no one has to listen to it, the same way he went to Rome to withstand “Peter” to his face on the justice of the Iraq war. Reese and Novak, two peas in pod, who have no docility to the Church teaching.

Obviously, there is nothing wrong with wanting to be your own man, and step out of wage slavery. That is a wonderful goal. But corporations are not entrepreneurs, and our system gives the advantage to the corporations. In the current system the would be entrepreneur (baker, butcher, computer programer, etc.) more likely will become a wage slave for a corporation, instead of owning his own small business. This is reality, as opposed to the Utopia of Novak. In the real world, with fallen men, the system will always be rigged. We have to decide, should it be rigged to favor many people being entrepreneurs and small business owners, or should it be rigged to favor multi-national corporations. Should it be rigged to favor people making moral decisions or immoral ones. Novak wants another option, but that option does not exist in the real world.

Only through the heavy hand of government can he compel you to hand over the dollar without your free consent.

That is not necessarily true. For example, Novak mentions “higher education.” Why is it a sign of development that the poor are entering higher education? Because education has been made into a social necessity, and the poor are required to go through the education system to get ahead. This does not help the majority of the poor, however, because it sets many others up for failure. Those who cannot afford “higher education” are “underdeveloped” because they haven’t payed to be “educated.” By this model of development, they are forced to pay for “higher education.” Learning is thus transformed from a personal pursuit to an institutional certification that can be bought. It is not the government that forces people to pay for education; rather, it is the way society has defined development. Another example is cars. The car system is about speed and luxury. In the name of “development,” the third world aspires to build roads and highways that accommodate the personal vehicle. This transportation system indirectly forces the poor to buy modern cars. Those who want to walk or travel some other way (the way the poor used to travel, ways that fostered independence) are left out. They have to enter the system of production and consumption. We turn commodities into necessities, and development thus becomes an endless chase after the carrot at the end of the stick. Modern society does not foster independence and self-support. It constantly creates new “needs” that require more consumption, which in turn require us to depend more and more on social institutions (education systems, car companies, etc.). We need to redefine how society is working, so that “development” is about fostering independence, not about endless production and consumption. Even in the “first world,” we have become a dependent society. The third world values an institutional education system precisely because the first world is so dependent on it.

I am glad the system works for you. But I have lived in more than a few areas, and always attended the TLM, and from what I have seen the system does not work for most of the young families with large numbers of children. In NH the men would get up at 5 am drive 2 hrs to where they could make a high enough wage to support their families, They would end up getting home at 7 or 8 just in time to say good night to their kids. Forget about daily Mass and other devotions. And even doing this, they were only just able to make it. This is the reality in most Traditional Catholic communities. It is the reality at the local SSPX chapel, and Indult chapel in my area, and it has been the reality at every chapel I lived near.

You do not think walmart and GM and Chrysler steal from you? GM and Chrysler are easy to see, no wonder you did not mention any of the corporations getting bailed out. But who do you think pays for the health insurance of Walmart employees? You do, because they are medicaid or other similar government program. Who do you think pays for their food, because Walmart does not pay a just wage? You do because they are on food stamps and WIC. At some Walmarts part of the orientation process, is helping the employees sign up for government assistance. In their business plan they take into account the money the government will kick, so they can lower the wage, and still keep employees. We already have redistribution of wealth in this country and it taking from the working middle class and giving to the rich corporations. And why does the government do this, because they have been bought by these corporations.

I’m not sure if “commodities” is the most precise word for what I meant. “Products” is probably a better word. Society turns not only actual products (e.g., cars) into necessities, but also services (e.g., teaching). A person who wants to teach themselves or walk has no place in modern society, because society has built itself around these so-called “necessities.”

I am loathe to enter the combox on this one, because any time economics becomes a topic on this blog, it seems that Mr. Sarsfield comes on to dominate the conversation and tell everyone that they have no idea about what they are talking.

To forestall that, let me say it first – I have no idea what I’m talking about. I am not an economist, nor am I a theologian who’s studied the Church’s social teaching in great depth. I have studied it, taken collegiate classes, read the social encyclicals, and have a reasonable grasp of some of the issues, but I am far from an expert, and therefore my two cents is worth…well, two cents (at least until hyperinflation kicks in).

Whatever one thinks of Mr. Novak, it seems that he makes some pretty undeniable points. Capitalism has been a great boon to humanity in many ways. The poor in most capitalist countries are so much better off than any other segment of society in human history. That ought not make us complacent about their plight, but surely even someone who thinks that capitalism is nothing but pure, unrestrained evil has to recognize that some good has come from it.

As for the liberals like Fr. Reese, it seems they’re up to their old tricks. Put out a bunch orf press releases and interviews before the encyclical is published, saying what it should say (in their mind at least), and then when it is released they can either take the tack “Pope Benedict wanted to condemn capitalism as a system of unrestrained evil, but was prevented by his handlers, or proof text quotes out of context that seem to indicate that Pope Benedict considers capitalism a system of unrestrained evil.

Is it really the case that love of innovation is more of a motive than greed? Sure, desire for innovation is important, but there are three problems with that claim:

(1) What did Warren Buffet innovate? Did Andrew Carnegie invent the smelting process? Innovation doesn’t reward nearly as much as consolidation, conglomeration, etc. What was Bill Gates’ innovation? He came up with Windows itself, and has been toying with that idea, and making it more needlessly complex and less reliable with every new iteration. Is Bill Gates really a great innovator, or is he something else?

(2) Innovation isn’t a per se good. If there’s any group who shouldn’t have to be told that, it’s Catholics.

(3) Even if we grant that innovation plays more of a role than avarice (which perhaps isn’t the case), and that innovation is good (which Catholics shouldn’t think is the case), we’re still left with avarice being a fundamental part of capitalism, which Novak admits to be the case. Perhaps it is not the greatest part, but capitalism is structurally dependent on avarice. Perhaps, as Novak cites a Lutheran as saying, avarice in pre-Protestant cultures created more poverty, whereas modern, Protestant avarice is good, at the end of the day, in endorsing capitalism, Novak is endorsing innovation and one of the 7 deadly sins. Can Catholics really support one of the seven deadly sins?

Before the Reformation, liturgy, society, and economy weren’t separated. The people you went to mass with were the people you lived with and traded with. The Church was frequently your landlord, and the market happened either inside or outside the parish. It is the reformation that severs these things from each other. If you embrace an economic and a social system that values innovation (or avarice) over anything else, how can you keep that out of your liturgy, unless you somehow think that what you do in your office and in the divine office have nothing to do with each other. The popes of the 19th and early 20th centuries knew this, as did anti-clericalists all over Europe. Nothign undermines the social fabric that ought be around the Catholic liturgy like avarice.

Having a bad day today? Pretty harsh statements, that I would not have expected from you. [I can’t say I disagree with Tim Ferguson.]

With regard to acknowledging nothing good about the system, yes in these comboxes, I probably do not. When I argue with socialists or communists about economics I probably err in the other direction, by not acknowledging the good in them. (Here I am a marxist, there I am capitalist pig.) But as I said, I have no problem with Mr. Novak’s system per se, it just can not and does not work. Are more people better off materially, and have more possessions under capitalism, yes. But are those people really better off? I do not think so. Is the average American happier, and healthier (spiritually as well as physically)? Do they have leisure time? Are families stronger under this system? I do not think so. Yes the poor have more material possessions, but they are also much more dependent on the system. In reality they are less free.

Hope your day gets better, may our Lady keep you and loved ones forever in the blue shadow of her mantle.

1- Companies cannot steal from me without the government’s heavy hand reaching into my pocket. Additionally, even the largest companies and monopolies do not last forever. Look at how many behemoths have entered and exited the Dow in the past 100 years.

2- The family you describe is infinitely more wealthy than you give them credit. They have clean water and good food. They have electricity and heat. They have shelter. They are free from daily violence. They live in one of the most beautiful areas in the world.

If they are not satisfied with that, they can pursue other employment in other places. The beauty of specialized labor makes them infinitely more productive and useful to many different employers.

I fail to see what you want. You say the government and corporations are colluding. And your answer is what? More government power? More favors for corporations? The third way is to let consumers vote with their dollars. To let innovators and inventors freely create new paths to prosperity. Government is not needed for that.

I’m with Mr. Ferguson today.
—-
Empirical evidence be dammned. We don’t have to worship this mere system, but for gosh sake, let’s acknowledge that it works on balance to achieve the most good for the most people. Greed is not compulsory in capitalism. I also was frustrated by reader Mark’s evading the point of the corruption and dysfunctional, despotic governments in the developing world which hold those nations back from prosperity, usually to line their leaders’ own pockets. That’s not capitalism.

Actually Mr. Sarsfield, I’m having quite a good day, but thank you for the prayers. If my statements came across as harsh, I apologize for the tone, but not the content. You do have a way of dominating the conversation when it comes to economics, and I’ve never seen you praise another commenter for his or her insight, except in a backhanded and apodictic manner.

It may well be true that those on the extreme left fault you for criticizing their system, as capitalists fault you for criticizing theirs. I’m not certain that economic theory is one of those sciences where virtue stands in the middle.

I think that capitalism has provided many people with great benefits – and not only material benefits. I think we do have more leisure time than those under communist regimes had/have. I think that the freedoms and liberties we enjoy in our society are not accidental to a capitalistic economy. That we use our leisure time poorly, or that we squander our liberty is, as you say, the clear result of the fall of man, it is not part and parcel of the capitalist economic system.

While you both level attacks against the negative impact of capitalism on people and society, isn\’t it just as conceivable that these are the result of political, and not economic, changes? This, of course, is setting aside for the moment the question of whether or not people are worse off now than before.

First I do not say things like “great post” or “ditto” because I thought that was against the rules of combox etiquette. If I had known it was allowed I would have done so on numerous occasions, in order to give encouragement to people defending my views, which are usually in the minority.

I never said no one knows anything but me, however, I do say/write things in a matter of fact style, as if there could be no other answers. Sometimes that is the case, and there really is no other answer, other times it is my opinion and perhaps I should make that more clear. I do wonder though if our esteemed moderator and others on the list would have such an unfavorable opinion of me, if I was arguing for their position. With regard to dominating the conversation, it is usually because I feel obliged to respond, when someone has taken the time to respond to me. I like disagreements, because I feel that is the time when people can learn. I would much rather have someone point out the weaknesses in my case, than give me a “ditto” post. As St. Thomas says “contrasts clarify.”

Finally, I do think that the vast majority of people that disagree with me on economics, did not get their views by studying the teachings of the Church. I was a conservative Republican/neoliberal economic thinker, until I study the Catholic Social Teachings. And I do get frustrated when Catholic lawyers, historians, politicians, economists, political scientists, etc. never for a moment consider what the Church has to say about these topics, and instead turn to non-Catholics, or the prevalent opinions of their nation. As my wife constantly reminds me, I have changed almost all positions on most topics from the time I married her (she thinks I became more like her), but I can honestly say that I changed my position, because I tried to submit my mind with docility to the Church. If I made a mistake, at least my intentions were high. I do not think Mr. Novak’s writings or actions reflects the same docility.

I must admit that I’m a little apprehensive about this encyclical; I read that it’s the only one not written by the Pope himself, for one thing, and I don’t know who his advisors were on this one.

I expect it may reflect some European soft socialist ideas, although at the same time, I can’t see the Pope complaining about “corporate greed” and offering statism or Islamic-style dictatorship as the solution, which is what leftists here are hoping for. In addition, he has always seemed to appreciate human freedom, so I also can’t imagine that he’s going to call for the suppression of economic freedom (which is, at heart, creative freedom).

“I’m not certain that economic theory is one of those sciences where virtue stands in the middle.”
–Tim Ferguson

Excellent, and absolutely true. Only the moral sciences deal with virtue. Virtue (or vice) is evident from how we moral beings use economic theory, or put it into practice, including the ends to which we put it.

The Church teaches (even in social teachings) on the moral aspects of this, not on the “science” involved. That is how the Church has asked that these teachings be received.

Sorry, looking back at my post it seemed a little cryptic and unrelated.

All I meant was that, while the spiritual effects of an economic system are certainly of interest, that issue seems to be more of a philosophical question, dependent on one’s understanding and interpretation of the interrelation between economic systems, political systems, social tendencies, etc., and the issue here is whether or not capitalism has improved the material life of man. It seems straightforward to me that it has.

“Whatever one thinks of Mr. Novak, it seems that he makes some pretty undeniable points. Capitalism has been a great boon to humanity in many ways. The poor in most capitalist countries are so much better off than any other segment of society in human history.”

This perception is an illusion.

The real issue is not the internal economies of nations so much, it is the position of the nation in the world economy, the world division of labor.

Countries at the core can be whatever they want, really. America happens to be internally capitalist and democratic, but Scandinavian countries are socialistic and doing fine, and Dubai is authoritarian and so is it.

It is not capitalism or democracy, internally, that have brought prosperity to these nations (and, by extension, even to their poor). It is wealth, period. Democracy and freedom are luxuries of the rich nations, not the cause of their wealth. Wealth obtained through exploitative EXTERNAL relations with the poorer countries, who could be capitalist and democratic internally until the cows come home but it wont get any better for them as long as we make them remain in the same exploited role.

Of course, poverty causes democracy and freedom to collapse usually anyway, and when it doesnt, we try to make it through war, debt-slavery, etc. Only every so often, to perpetuate the illusion, and when it can be done without us losing money, does the core welcome a new nation into its club to “prove” that adopting certain systems is beneficial (though really they want the other nations to pursue them exactly so that they can continue being exploited).

“As for the liberals like Fr. Reese, it seems they’re up to their old tricks. Put out a bunch of press releases and interviews before the encyclical is published, saying what it should say”

Uh…seems to me that Mr Novak is doing the exact same thing, just disguising it as a “response” to Fr Reese. But he too is speaking authoritatively about things before he has even read the encyclical. I say we should all wait until we actually read it to discuss the specific contents of the encyclical.

Hm. I don’t know enough about my German peasant ancestors, but let’s consider my Irish peasant ancestors. They had reasonably good law under the old Gaelic system, but there was also slavery and a strong caste system. They had the clan system of distributed land, but it didn’t usually do the slaves any good. The only way to really get ahead was to do well as a sharecroper of cows and thus rise in the stock market, or to join a monastery. And without capitalism, there was no way to feed animals if the weather turned cold and killed the grass, or to feed people if the grass and the crops failed. Even a well born child of wealthy parents might own only two outfits. The climate was such that food storage was difficult and rot easy; hay was never used. So most of the time everybody was fed okay, but reasonably often, the vast majority starved. Monks went to universities in curriculum, but could only go to class certain days of the week. The rest of the week, they were out begging food from the surrounding countryside, or if lucky, being treated to dinner by a wealthy person at his/her home. Bathing was valued, but you did it in tiny sod bathhouses for the most part. Cooking was usually boiling meat or making flatbread or porridge.

Water had to be boiled for drinking or cooking. Open hearths polluted lungs
and burned down houses in a trice because of the necessary materials. Art was valued, yes, but only because there wasn’t much else to do in the winter besides talk or listen, and wonder if this was the winter when the beasts would starve.

Our lives are the stuff of descriptions of Tir na nOg, where there’s always plenty of food and drink and good raiment, where entertainment is cheap and good, where travel is swift, and people live long while always seeming young and strong.

It would be easier for us to insert their virtues and advantages into our lives, than for use to insert our advantages into theirs. They couldn’t afford education for most, as much as they respected it, because work had to be done — except in the winter.

Oh, and let’s not forget wergild. I know today’s legal system often resembles wergild in practice, with the rich’s testimony and lives worth more than those of the poor. But in the widespread wergild system that was in force pretty much everywhere across Europe, including Ireland, that was true in theory and point of law as well.

The sub-prime mortgage villain is one of those very partial ideological orthodoxies that fails as a sufficient explanation.

The government did not have any role in the use of CDSs in the leveraging of the much smaller problem of sub-prime mortgages, other than by omission, for example, (1) Senator Gramm’s successful but fateful effort (in a GOP-controlled Congress at the end of a lame-duck Democratic president with a relatively pro-market Treasury department) to prevent regulation of derivatives, (2) the GOP-dominated SEC’s relaxation of net capital requirements, and (3) the much earlier de-regulation of interstate banking limitations and Glass-Steagall that allowed over-leveraged financial institutions to become too big to fail. Possibly the major government action in the popping of the bubble was the rescue of Bear Stearns that reinforced illusory expectations of market makers – had BS been allowed to fail, it would probably have just accelerated the panic, though.

Another huge factor in the timing and form of the bubble burst was the speculative bubble in fuel commodities markets.

Too many people in the past generation have come to read Adam Smith as more prescriptive and ideological on capitalism than he in fact was: Adam Smith is better appreciated when read as primarily descriptive – his thought describes how people will tend to act under certain conditions of freedom. The ideological use to which he has been put would likely have appalled him. Ideological capitalism, like all ideologies, is a conclusion in search of an explanation.

Working for your daily bread is part of being human and has nothing to do with avarice. It also has very little to do with capitalism. Why do you assume that when I criticize capitalistic avarice, I\’m criticizing work? Working a reasonable number of hours in a week to support oneself and one\’s family is clearly not avarice.

But there\’s a certain line. I\’m reluctant to say specifically where that line is, but capitalism tends to encourage going beyond that line. Why do people work in a capitalist system? Is it to support themselves and their families? Or is it to \’generate wealth\’? If you have a system aimed at not being indigent, and at the support of families, then you don\’t have a system centered around avarice. If your whole economic system is aimed at \’generating wealth,\’ I think it\’s safe to say that avarice is a part of it.

Alfred,

If you improve material culture, while treating avarice as a virtue, is that an improvement of life? The philosophical question is, hopefully, the one with which his Holiness will deal (and his previous two encyclicals seem to suggest that he will). In fact, capitalism\’s success at improving material life seems to be its biggest liability; defenders of capitalism point to its material success to answer why capitalism is good, without considering the negative effects of avarice on the person, on society, and on the Church. People like Novak tell us that capitalism is okay because the avarice is paired with innovation and it makes money — does the fact that it\’s successful, innovative avarice change that it\’s avarice? Doesn\’t that just make the avarice worse?

Thank you for making that distinction. But I am a bit concerned about the arbitray nature of the line you draw.

When does a reasonable number of hours become unreasonable?

I can work 20 hours per week to support myself.

I can work 30 hours per week to support myself, my wife and my children.

I can work 40 hours per week to support myself, my wife, my children, my charitable giving, my leisure activities, and my early retirement.

I can work 50 hours per week to support myself, my wife, my children, my charitable giving, my leisure activities, my early retirement AND to leave an inheritance to my children and grand children so that they can at least afford a decent house, and Catholic schooling.

Show me an economic system that has raised more people out of poverty than capitalism than I will listen. Demonizing wealth is absurb. After all, did
anyone ever get a job from a poor person? But for wealth, there would be no St Peter’s Basilica.Tom

Although Veritas in Caritate will be Benedict’s first comprehensive social encyclical, he’s repeatedly addressed social themes elsewhere, often striking three interrelated notes:

1- Concern for social justice must not replace individual charity;
2- Preaching the Gospel is essential to building a better world, because a world without God is destined to be inhuman;
3- Systemic reform, though urgent, will not succeed without individual conversion.

I hope we can ALL agree on those 3 points.

Any economic or political system must be aware of thenatural and the supernatural. It must be aware and directed towards man’s ultimate end.

“Not to be flippant, Mark, but is your position really that wealth brings prosperity?”

Lol. No, my position is that wealth brings freedom from political oppression within a nation, not the other way around. That democracy and freedom are a luxury that rich nations can afford to provide their citizens, to buy their complacency. So they are indeed correlated with prosperity, but they are not the cause of that wealth, which has to do with the nations position in international trade.

One should really say that it is the poor in RICH countries that are better off (regardless of how they run things internally), not the poor in “free” countries (whose life still sucks if they are a POOR democracy). It just so happens that most of the rich countries can afford to give their citizens freedom, and most of the poor countries tend towards social unrest and thus political instability.

“Show me an economic system that has raised more people out of poverty than capitalism than I will listen.”

But it raised them out of poverty EXACTLY by causing others to move farther down into a level of poverty never seen before in human history. Yes, the core has provided a pretty tolerable life for even it’s poorest citizens, but only by creating a vast poverty at the periphery to fund it. And if they were to “become like us” we wouldnt like that, because someone has to lose in Unequal Exchange. All it’s done is widen a gap. Sure, it’s raised billions of people to a better life, but only by pushing billions down into a worse.

I suppose this gets back to the philosophical question of “are we really better off?” In spite of material success, these countries are culturally bankrupt. They suffer from high abortion rates and practically non-existent church attendance. Can one really categorize this as a success?

Is one poor if they don’t have leisure? I can’t really see that giving leisure to more people has done a lot to improve culture in the Western world. Are more people getting to heaven now than before? Don’t get me wrong, I love my leisure, but I’m not sure that there isn’t some sort of spiritual element, much like the intangible “spirit of romance” Mr. Novak alludes to that must be a factor in determining the success of an economic system.

Lol, Mark. Yea, I kinda figured your position was what you explained. I guess because I disagree I couldn’t help teasing. I’m sure I’ve written something far less clear here.

I think that georgeaquinas’s point that we should just wait and see what the Pope says is absurd. What kind of rational, temperate position is that for a blog-poster to take?! Obviously, the only way to correctly interpret His Holiness is to read our own positions into his work, hopefully from the safe distance of not having access to it for clarification and correction!

Jamie, I certainly agree that the improvement of man’s spiritual life is of paramount import, although I would blame “modernity”, understood as the worldview stemming from a radical change in philosophical outlook that allowed for the Scientific revolution, and not “capitalism”, for the excessive and exclusive focus on material well being. And I think that it is debatable whether or not “capitalism” as an economic system has treated avarice as a virtue to a greater extent than other systems. Avarice’s ever present nature is why it is one of the big sins man cannot escape.

All that said, I acknowledge the danger inherent in any method that produces material prosperity to deny, or at least denigrate, the spiritual. I just think that material prosperity is a good thing, in its proper bounds, and if something contributes to it, that is also good.

The Apostles’ preaching is their most important task, but their tending to the material needs of the poor, the widow, the orphan were powerful testimonies to the Faith, and the material consummation of the commandment to love their neighbors.

In sum, I guess I would say that capitalism, in itself, seems to me to be amoral, and it is up to us to imbue it with morality. To be fair, though, I would also say that communism, at least as propagated by Marx, was in itself immoral. I’ll have to think more on the exact reasons why I think this, but of the top of my head, to take Liam’s point, I think a kind of capitalism is less of a planned system and more of the natural order of things, and as such avoids the temptation to understand itself as the be-all end of the world-historical movement.

In short, it’s not a conscious attempt to play God. The danger remains, though, that it go the other direction and degenerate to the point where men are playing beasts.

“I suppose this gets back to the philosophical question of “are we really better off?” In spite of material success, these countries are culturally bankrupt. They suffer from high abortion rates and practically non-existent church attendance. Can one really categorize this as a success?”

No. And neither can we categorize America’s hypocritical religiosity or decadence, though there is certainly a difference between us, and one that only appears positive towards us.

The European nations are jaded because they are core nations, and yet not the hegemon itself. As such, they have leisure and luxury, but also a purposelessness.

They’re like the younger son, the brother of the king; guaranteed to remain pampered because of their family, but also drifting and listless. Consigned to remain in their brother’s shadow, having to sit down the table from him at state banquets, representing him sometimes at ribbon cuttings and charity benefits, but also having a lot more time to engage in decadent frivolities, ultimately seething because he is not his own man.

America indeed has the “romance” and “meaningfulness” that you speak of, but only because we have the prestige and power as well as the money. Europe has the money too, but only as the Duke of Whatever, not the King. They’re like the other baldwin brothers…

“I think that georgeaquinas’s point that we should just wait and see what the Pope says is absurd. What kind of rational, temperate position is that for a blog-poster to take?! Obviously, the only way to correctly interpret His Holiness is to read our own positions into his work, hopefully from the safe distance of not having access to it for clarification and correction!”

ROFL!

Thank you, Alfred, for your other thoughts as well. They helped me frame some of the other ideas running loose in my head:)

“Are you really suggesting that economics is a zero sum game? That the only way for one individual to bdig out of poverty is to bury another in it?”

No. No, that’s not the only way at all! I know that the “pie” isnt of a limited size. That the pie is growing and so theoretically everyone could get more and more better off.

And yet that is not how our CURRENT system works, bafflingly, even as total production ever increases. Yet the gap keeps widening, the rich are made rich through structures that make the poor poorer. The pie is getting bigger and yet the poor are getting less of it, and less of it absolutely even, not just proportionally. The rising tide isnt raising all ships, and that is a grave scandal.

But gI know there are systems where it could, ideoloical capitalism just isnt one of them.

First, I want to post this from Pius IX, so everyone can see why I am adamant about economics:

“41. Yet before proceeding to explain these matters, that principle which Leo XIII so clearly established must be laid down at the outset here, namely, that there resides in Us the right and duty to pronounce with supreme authority upon social and economic matters.[27] …

“42. Even though economics and moral science employs each its own principles in its own sphere, it is, nevertheless, an error to say that the economic and moral orders are so distinct from and alien to each other that the former depends in no way on the latter. Certainly the laws of economics, as they are termed, being based on the very nature of material things and on the capacities of the human body and mind, determine the limits of what productive human effort cannot, and of what it can attain in the economic field and by what means. Yet it is reason itself that clearly shows, on the basis of the individual and social nature of things and of men, the purpose which God ordained for all economic life.

“43. But it is only the moral law which, just as it commands us to seek our supreme and last end in the whole scheme of our activity, so likewise commands us to seek directly in each kind of activity those purposes which we know that nature, or rather God the Author of nature, established for that kind of action, and in orderly relationship to subordinate such immediate purposes to our supreme and last end. If we faithfully observe this law, then it will follow that the particular purposes, both individual and social, that are sought in the economic field will fall in their proper place in the universal order of purposes, and We, in ascending through them, as it were by steps, shall attain the final end of all things, that is God, to Himself and to us, the supreme and inexhaustible Good.’ (QUADRAGESIMO ANNO, Pius XI, 1931)

I would recommend everyone read the entire encyclical remembering liberalism in economics is capitalism. Unfortunately, many Catholics reject the notion of the Church teaching on economics because it is a science. Pius XI was clearly familiar with this argument and dismissed it.

As to my ideal economic system, a have no particular attachment to any, I only want the system to take into account the principles of Catholic Social Teaching and the fallen nature of man. My system would attempt to deal with the following areas:

1. Man has a fallen nature, and disordered passions, therefore the system should be designed with this in mind.
2. The system should encourage virtue by rewarding virtue. If the system rewards greed, and other sinful things it should be rethought.
3. There must be some limits to competition. Unlimited competition ends in monopoly.
4. The tax code should favor large families, small business, and workers. It should not favor big corporations.(today we have the opposite)
5. Business laws should encourage small business and discourage big business. (today we have the opposite)
6. Law should discourage consumerism, which has been preached against by all the recent Popes.
7. Business and Tax laws should encourage the wide distribution of productive wealth
8. Usury, interest on non-productive loans (mortgages, credit-cards, consumer loans) would be forbidden.
9. Taxes on all non-productive assets would cease (on property tax, unless the property is a business)
10. A stable monetary system, that does not punish savings, and fixed incomes through inflation
11. Associations to regulate industries, overseen by the government but not run by the government
12. Subsidiarity, obviously the Federal Government needs to be much smaller
13. No Federal/State welfare programs for business or individuals. As you can see by reading the blog, it only encourages animosity from the overtaxed workers not on welfare
14. Local welfare programs need to encourage marriage/family, and give real help to make them self sufficient

I know I am leaving a ton out like encourage coops, and employee owned business, discouraging stock corporations where the owners have no real interest in the business or operations of the business (but you requested a short list). Basically I would take Pius XI’s QUADRAGESIMO ANNO and implement it in practical terms, and I would head his warnings and condemnations of economic liberalism, which is capitalism. I know the list is general, if you would like my ideas on how to bring that about I would answer them, but remember they would just be ideas and I would be open to better ones.

Here we all are typing away on comuters, in air
conditioned homes. Your children have no fear
of whooping cough or polio. They do not work in
the fields, nor do they have to go into to town
to work. They are actually free to be children.
You have books to read, cozy beds to sleep in and you
can go to the grocery store or a restaurant.
We live in a country where poor people are fat and
can afford to have multiple children because
someone else picks up the bill. All brought to you
by capitalism.

“America indeed has the “romance” and “meaningfulness” that you speak of, but only because we have the prestige and power as well as the money.”

I don’t think so. In looking at our founding, it seems we had more such “romance” before we had so much prestige and power. It also seems a classic chicken or the egg question, but it seems we’ve lost those spiritual elements as our government has grown and become more socialistic in the past century.

As I said, I don’t know where exactly the line would be. However, there is a certain amount of wealth which I doubt someone who isn’t greedy would have. That is, I think one can take an inordinate amount of wealth as evidence of inordinate desire for wealth. If you working 80 hours a week, or thought you supporting your family meant having a 2 million dollar house, then I’d begin to suspect that there may be a little of avarice.

Those three points, and your summary, of course are true. Folks like Novak probably wouldn’t agree. Hinted at in this thread, and more so in the last thread on the impending encyclical, the point is repeatedly made that economics is a science, and that the only question you can ask of an economic system is whether it produces wealth. We should remember that though economics is a science, it is no more than a handmaiden, and that if it treats a vice as a virtue, it fails to be a true science.

Alfred,

Is capitalism separable from modernity? The same enlightenment thinkers who pushed for capitalism pushed for plundering the Church’s wealth. The same bourgeoisie who killed the French king put up the altar to pure reason in Notre Dame. Communism is worse, but it follows from a capitalistic view of the labor-capital relationship.

Mark claimed: But it raised them out of poverty EXACTLY by causing others to move farther down into a level of poverty never seen before in human history.

No, it didn’t. Speaking generally, even those still in poverty around the world are nowhere near as bad off as they used to be. You simply don’t know what you’re talking about . . . and don’t think people here didn’t notice your failure to mention the economic system that has raised more people out of poverty than capitalism. You know there isn’t any better system on the table, so you’re changing the subject. Whether or not a better system may someday come along is another subject.

Your claims that freedom and democracy are luxuries that wealthy nations can afford to toss their people also bear no resemblance to anything that has actually happened in human history. Just check U.S. history, and you’ll notice that freedom and democracy PRECEDED America’s dramatic and unprecedented rise to wealth and international status. If your beliefs were true, it should have been the other way around.

As I said, you simply haven’t the slightest idea what you’re talking about.

dymphna, I don’t think anyone is complaining about their own situation, but the question of whether our being able to enjoy all the luxuries you list at the expense of someone else doing without is the crux of the debate. It is valid to question whether others are living in greater poverty than they otherwise would because of the system that allows me to live in such comfort.

I personally feel woefully inadequate to be discussing economics, but it is something I desperately want to understand better. These discussions always suck me in!

We should feel troubled to occupy an evil, exploitative function in the world economy, even if we “personally” are good people.

Being rich isnt wrong in itself. But most of us live rich, not because we work harder (I challenge anyone of us to live a day in the life of an African manual laborer) or even invented something (most of us are not entrepreneurs), but merely because we were born (or somehow found our way into) the advantages of an evil system, a dominating network of power…that should at least trouble us, even though we didnt choose to be born in the core.

The radical individualism promoted by ideological capitalism, however, wishes to avoid those feelings of troubledness and responsibility. At best, it pays lip service to individual donation. It suggests that as long as one is personally blameless, one doesnt need to be concerned by unjust systematic structures. “Hey, I’ve never murdered anyone, and I put money in the pots at Christmas”.

When really, individual donation help a few people and are at best treating the symptoms, while structural changes could help hundreds of millions. “Feed the man dying of hunger, because if you are not feeding him, you are killing him. It is a case of murder by omission.” Just because he is half-way across the globe and it is impersonal “governments” or “corporations” resulting, in a complicated way, in his starvation…doesnt mean you dont have a responsibility or that his problem is his country not just “acting more like us”.

So often the canard “The rich get richer and the poor get poorer” gets trotted out, as if the phrase is somehow true.

It’s not, and any analysis of the current economic realities will reveal that.

Over the last 50 years the rich have gotten richer, and the poor have gotten richer. This is true in America and worldwide.

Wealth is not a finite good, it is created. What matters is not the concentration of wealth as a percentage, but rather the wealth held by the poor in relationship to the cost of the good they need and want.

For example, there has been a greater concentration of wealth in the hands of the richest Americans, and yet there are now over 9 million millionaires in the US, the face of poverty in America is radically different than it was 50 years ago.

Where once poverty in America meant 3rd world conditions, now it means owning a vehicle, having multiple rooms, and having cable TV.

People can debate about the relative merits of any number of things, but please at least debate about those merits in relationship to the reality of the situation.

“The rich get richer and the poor get poorer” is simply false. Just ask India, China, and South East Asia.

“No, it didn’t. Speaking generally, even those still in poverty around the world are nowhere near as bad off as they used to be.”

Billions of people live in slums. I do not think they are better off than, say, medieval serfs. And especially when considered relative to the Gap between rich and poor.

“don’t think people here didn’t notice your failure to mention the economic system that has raised more people out of poverty than capitalism. You know there isn’t any better system on the table, so you’re changing the subject. Whether or not a better system may someday come along is another subject.”

The question is framed manipulatively. Name a system that “has” raised people out of poverty? I couldnt do that, as since it’s existence capitalism hasnt given alternatives a chance to ever really be tried. Even communist nations have had to function externally as capitalists in the world market. Also, as I said, the raising from poverty of some has entailed the pushing deeper into poverty of others, so compared to something like medieval feudalism, it might cancel out as a wash.

But as for systems proposed or on the table, though they have never been really tried to I can say they “have” raised people out of poverty (though they WOULD)…my main favorite idea is Social Credit, which I believe would solve most of the problems, and tend toward a distributism in society (ie, the means of production owned by the workers, individually and specifically, not collectively). Other ideas from Pius IX would also be implemented.

“Just check U.S. history, and you’ll notice that freedom and democracy PRECEDED America’s dramatic and unprecedented rise to wealth and international status. If your beliefs were true, it should have been the other way around.”

As a British colony, America was ALREADY bourgeois. It rose to power so dramatically because it represents, in a nation, the rise of the capitalistic middle class. It’s bourgeois nature made it perfectly positioned, but it was ALREADY prosperous even before the Revolution etc, because of the middle class nature of its economy and founders.

I do not possess the wherewithal or expertise on the subject to make an intelligent or useful contribution, however I am familiar with a few of the recent statements of this pope and his predecessor on matters of economic justice. I do hope that the faithful Catholic will humbly incline his or her ear to listen to the successor of Peter’s comments on these issues.

First, section IV of John Paul II’s Centesimus Annus, and in particular, paragraph 42, which I’ll copy and paste here:

“42. Returning now to the initial question: can it perhaps be said that, after the failure of Communism, capitalism is the victorious social system, and that capitalism should be the goal of the countries now making efforts to rebuild their economy and society? Is this the model which ought to be proposed to the countries of the Third World which are searching for the path to true economic and civil progress?

The answer is obviously complex. If by “capitalism” is meant an economic system which recognizes the fundamental and positive role of business, the market, private property and the resulting responsibility for the means of production, as well as free human creativity in the economic sector, then the answer is certainly in the affirmative, even though it would perhaps be more appropriate to speak of a “business economy”, “market economy” or simply “free economy”. But if by “capitalism” is meant a system in which freedom in the economic sector is not circumscribed within a strong juridical framework which places it at the service of human freedom in its totality, and which sees it as a particular aspect of that freedom, the core of which is ethical and religious, then the reply is certainly negative.

The Marxist solution has failed, but the realities of marginalization and exploitation remain in the world, especially the Third World, as does the reality of human alienation, especially in the more advanced countries. Against these phenomena the Church strongly raises her voice. Vast multitudes are still living in conditions of great material and moral poverty. The collapse of the Communist system in so many countries certainly removes an obstacle to facing these problems in an appropriate and realistic way, but it is not enough to bring about their solution. Indeed, there is a risk that a radical capitalistic ideology could spread which refuses even to consider these problems, in the a priori belief that any attempt to solve them is doomed to failure, and which blindly entrusts their solution to the free development of market forces.”

““The rich get richer and the poor get poorer” is simply false. Just ask India, China, and South East Asia.”

The Second World has made marginal gains, at the expense of the Third. The Semi-periphery is indeed expected to raise itself gradually, but not as fast the core, and only at the expense of the periphery.

Africa, namely, is the main great black hole of increasing entropy, against which the decreasing entropy of other nations is mortgaged.

Jamie, I’m not quite sure which thinkers you are thinking of (sorry, couldn’t think of a better way to say that)who pushed for capitalism. Unlike communism, which certainly stems from an odd mix of capitalism and Hegel, capitalism doesn’t seem to be a system created or advocated by anyone. Not to say that there aren’t those who are now advocates of capitalism, just that it seems that its advocates are pushing for what they think is true.

There’s an interesting tendancy there in capitalism. The thought process is– here’s how the world works (Smith)– here’s how the world should work (capitalist advocates). Sort of like the is–to–ought move so beloved by freshman philosophy students the world over. Of course, is–to–ought-not is equally invalid.

The more I think about this, the more I’m unsure what we mean by the word “capitalism”. It’s not really the opposite of “communism”, which has at its core a whole worldview, of which the economics is but a part. It’s been too long since I’ve read Smith. If economics is a science, is “capitalism” a theory/framework through which we explain our observations, analogous to “quantum field theory”? We’re all talking about it as if it’s a method, one among many with which we administor the economy, as if the issue was, “Are we going to direct this horse with the reigns or with commands? Should we spur it or put a carrot in front of it?”

And yes, the horse is the economy. Feel free to quote me. Or, more likely, laugh and chalk this up to the Metaphor that got away.

Oh, and Lindsay– I am totally addicted the word “seems.” It’s my “like”. I can’t get away from it.

Thank you for the effort of responding. Unfortunately, you listed a number of errors:

1. The system should not be “designed”. That concentrates power too much.
2. Hasn’t the crisis shown that if we didn’t bail out banks, then the greedy would have been punished by their own bankrupcty?
3. Absent government interference, there are NO permanent monopolies.
4. The tax code should be minimal and neutral.
5. Big business is owned by millions of small investors. If you hurt big business, you hurt the retirement and savings of many poorer investors.
6. Is the seller the cause of consumerism or is the buyer? You seem to blame only the seller.
7. Business and Tax laws should be neutral and locally written.
8. Man is owed a just wage for the use of his labor capital. Why is he not owed a just interest rate on the use of his monetary capital?
9. Taxes on all non-productive assets would cease- okay, but I don’t see where your “productive” definition comes from.
10. A stable monetary system- I agree!
11. Associations to regulate industries- the gov’t will only damage these efforts
12. Subsidiarity, obviously the Federal Government needs to be much smaller- Agreed!
13. No Federal/State welfare programs for business or individuals. Agreed! they are contrary to true charity and dignity
14. Local welfare programs- not gov’t run. The Church and other charities can handle it.

Doesn’t he owe a responsibility to his clients to maximize the return? (yes, without theft, or fraud or violent or pollutive means)”

Derivatives trading IS fraud, though, in itself, for the most part.

When truly done between actual produces (like a farmer and a miller making a contract over the future price of wheat), fine enough.

But today there are all sorts of gamblers, professional derivatives traders, who are totally disconnected from anything real.

Tell me, what product is he producing except pure abstract demand in itself, what is he trading except “risk”?

Turning ideas and emotions into abstract financial commodities like that is unnatural and bound to fail, and the only reason the populace hasnt demand that they be outlawed is because they are two abstract and complex for most people to understand.

I don’t think there’s any reason to belittle the man who puts money in the pots at Christmas or the woman who feeds an individual. In railing against the “evil system” that has “created” all this poverty, we’d all do well to remember that “The poor will be with us always.” Statement of fact.

Why didn’t Christ work more against the destructive heirarchichal nature of Society that created the poor? Because He didn’t care about the “nature of Society”. He cared about men. This one, that one, each one, but always as individuals.

I’ll take direct, personal action to the needy over vague, impersonal attacks against all the “core nations” and those terrible “bourgeouise” who have the gall to not buy into the idea that they’re wicked. We shouldn’t be “troubled” by the fact that we have and others have not– we should give, and in direct ways.

At the end of the day, I’d have to agree that capitalism didn’t “raise” people out of poverty. That sentence is so vague and philosophically empty as to be meaningless. What’s the subject? “Capitalism”? How does this “system” act? On what is it acting? “People”? Which people? Etc. But this is a complaint that’s equally valid agains all de-personalized “systems”.

Capitalism doesn’t help people. “Systems” don’t help or hurt. Individuals help other individuals, or they hurt them. That’s how we can help our neighbors. That’s how Christ, and the Church as the Mystical Body of Christ, can help us.

I agree with pretty much all the specifics you mention. I would only say that the political pressure placed on banks to “liberalize” their underwriting criterion to avoid red-lining was important. Whenever financial institutions have done that, we have been close to a collapse (1988-1992 is a good example) in the housing sector.

And, I would add about the repeal of Glass-Steagall the following. When G-S was legislated (1933) and, for example, the House of Morgan split up into Morgan-Guaranty and Morgan-Stanley, the former was a bank proper, and MS was an investment bank or broker-dealer. All the latter sorts of companies were, at that time, partnerships. That form of organization means that if the partners (mostly very well-heeled individuals) want to take more risk, they bear the brunt of it personally. If they go broke, a few individuals are in trouble not the whole system.

When the G-S law was repealed recently, all investment banks of any size were publicly-traded corporations. The attitude on Wall Street had become, take risk: if we lose, the stockholders bear the brunt of the losses, if we win we take home the bonuses. In other words, the interests of risk-takers were skewed relative to the interests of the shareholders, and the latter were skewed (too big to fail) relative to the economy.

It’s interesting that no private-equity firms required being bailed out.

1. All systems are designed, if they just existed in capitalism Lew Rockwell, Novak, and the Acton Institute would need new jobs.
2. No, because the system does reward greed in many areas. If you are greedy and wiling to be immoral you will have an advantage in our system.
3. Unlimited competition, ensures that whichever person has the economic advantage will use his advantage to consolidate and expand his market share until he has a monopoly. Contrary to the old saying the world will not beat the path to your door for the better mousetrap. Through unlimited advertising, special purchasing agreements with suppliers (If you sell to the little guy, I will find some one else to supply me) and the purchasing of special legislation, and other means the person develops a monopoly.
4. So the state should encourage people to have no children, by eliminating the per child tax credit. See there is no neutrality. Neutrality means making it easier and monetarily advantageous to commit vice. No Catholic Pope has ever spoken out in favor of such a system, quite the opposite.
5. Big business is not owned by small investors, small investors are their pawns. When things go bad it is always the small investor that gets hurt, and the big investor that makes a fortune.
6. I do not blame the seller or the buyer. I blame the system. Both are acting in their own perceived best natural interest, unfortunately, they are being deceived by the system. And the common good is suffering for it.
7. Again neutrality is a myth. If they are not written in favor of the small guy that can not afford lobbyists they will eventually be written in favor of the big guy who can.
8. Usury has been condemned often, and the condemnations fit the requirements of infallibility as put down at Vatican I. Loans that are not productive can not be charged interest.
11. Perhaps, but if the system is designed from the beginning, with the nature of man considered, this could be limited. It certainly would be no worse then the current system.
14. Government run, only if every other method fails.

Where we disagree, I am going straight from the encyclicals of the Popes on these questions and Popes are telling me that their teaching on these matters is binding (see the quote from Pius IX above). You might want to read QUADRAGESIMO ANNO, I do not know if it will change your mind, but at least you will know what is at stake:

Unless he makes $5,000,000 in a day by accident, then that derivatives trader is absolutely guilty of avarice.

Alfred,

I think you may have hit the nail head. Capitalists describe the supply-demand and the labor-capital relationships as if they were natural laws which must be obeyed, and then make the move to say that they ought be obeyed. Avarice ceases to condemned as a sin and and becomes accepted as something that is in any economic arrangement. Whether we ought treat avarice (without which the ‘law’ of supply and demand probably doesn’t work) as a law of nature is never asked.

It would be interesting in this sort of discussion to find out what the folks taking various sides do for a living. For example, Flamma (who I agree with) owns a business. I work in productive, private sector job where I not only support my own family but help keep over 250 other people employed supporting their families. What do you folks who are so critical of capitalism do? Are you government employees? Academics? Unemployed graduates of Catholic liberal arts colleges?
Since man’s fallen nature is used as a club to beat capitalism with, shouldn’t it also be a caution against the government types “designing” a system? Are you arguing that they are exempt from fallen nature?
And to a post way up the list: Shall I really be upset about capitalism because a bunch of Pius X types have to commute a long way to their jobs?

Hate to hit and run, I know it’s not fair, but I do have to split and I just wanted to say that it’s unclear to me that Avarice is condemned less under Capitalism than under Feudalism, Imperialism, Mercantilism, etc.,as it was never the system that was condemning any sin but God and the Church, and maybe it’s just that it becomes a more obvious and therefore apparently problematic vice when more people have money.

Also, I think supply and demand functions fine without avarice, as people always needs goods, and, allowing a progression beyond the neolithic, goods that they can’t exclusively provide for themselves.

I agree that the encouragement of subprime mortgages and discouragement of redlining themselves would have, without the other factors, likely have resulted in a greater crest and therefore greater corrective in the housing market than if they had not occurred. But (1) the other factors swamp that factor in scale and scope, and (2) bank redlining was hardly always the purely economic calculus some banker lobbyists have tried to portray it but itself could be riddled with irrationality. Anyone who thinks all activities of private enterprise are efficient has not spent enough time in them – efficiency is much more a macro than micro reality.

I also agree with your observation about the context in which GS was adopted and repealed.

I would also add that the bubble demonstrated there was an investment glut – too many investment dollars seeking better-than-average returns produces bubbles. The Bush tax cuts should have been sunsetted after 3-5 years, not 9, as they did not help in this regard, pace the likes of Larry Kudlow.

I should add that a good, 1986-style tax reform would be to phase out the home mortgage interest deduction – perhaps over 20 years (consumer credit interest deductions were phased out over 4 years, for those old enough to remember).

Greed is not essential to the laws of supply and demand. The upward-sloping supply curve is based on the insight that people would rather have a high price at which to sell than a low price. The downward-sloping demand curve is based on the insight that a buyer would rather pay a low price rather than a high price. Given all the other assumptions (perfect information, no friction, etc., which one can argue about) the theory simply says that where the two curves intersect, will be where the average price is.

That goes back to Adam Smith, and I agree with Liam that he is being more descriptive than presecriptive in the Wealth of Nations. He was a Professor of Ethics, and he was concerned about the callousness of the British government’s policies in the face of the needs of the poor.

Perhaps the ideology with which you ought to be gnawing away is what used to be
called economic Darwinism, which is truly an aberration.

Last shout out. Private Sector employee here. Loved the bit about “designing” and all. Seriously, if man is fallen, has anyone ever looked at a whole bunch of people together? Like, at a mob?

Makes you think that there might be something to “total depravity,” but only when a whole group is together. Man’s moral and intellectual tendencies seem to go down as his number in a collective grows. It’s exactly man’s fallen nature that makes me nervous about grand plans to fix everything. No way that could go wrong, right?

I have been self-employed for 3 years, before that in investment management (legal and regulatory compliance) for over 15 years. Having been paid to be an ethicist within the beast (within my limited purview) I have to say that I find the more ideological approach of Novak to be rather untethered from reality.

Anyway, this is not very relevant from a logical perspective. The individual context of our arguments does not validate them or invalidate them per se, else we have one of the most common of logical fallacies….

“I don’t think there’s any reason to belittle the man who puts money in the pots at Christmas or the woman who feeds an individual.”

No, of course those things are good in themselves.

But if they just serve as pat-yourself-on-the-back “okay, now I’ve done my part and can go on living my luxurious life” salves to induce complacency and quiet conscience in the face of systematic and structural injustice impoverishing millions of people in a way that throwing money at them is never going to help…then they can be just token actions to escape feelings of responsibility.

“In railing against the “evil system” that has “created” all this poverty, we’d all do well to remember that “The poor will be with us always.” Statement of fact.”

The poor will, but who is “poor” is very relative and things could be much more objectively better for everyone.

A gap where the US average income is $30000 a year and in some third world countries it is $400 a year is not necessary. Discrepancies are always going to exist, there have to be gradients for any work to be done at all, and the people on the lower end of the spectrum are always going to exist and constitute “the poor”…but they’d be a lot better off if their income was $5000 a year and ours was only $15000 instead of the $400 vs $30000 dichotomy.

They’d still be the poor, who are always with us, but that does not mean that the spectrum has to be so wide or that there always have to be some examples of the current extremes. “The poor” does not have to mean the starving-to-death.

“Why didn’t Christ work more against the destructive heirarchichal nature of Society that created the poor? Because He didn’t care about the “nature of Society”. He cared about men. This one, that one, each one, but always as individuals.”

And because Christ WAS of the poor. He came from a peripheral region of the Empire, so (besides the fact that He was God and had salvation of the world to worry about) it really wouldnt have been his responsibility. If he had been a Roman Senator or rich merchant, I might indeed have expected him to act differently. But the poor arent responsible for ending poverty (what the capitalists seem to think), they are the victims.

“I’ll take direct, personal action to the needy over vague, impersonal attacks against all the “core nations” and those terrible “bourgeouise” who have the gall to not buy into the idea that they’re wicked. We shouldn’t be “troubled” by the fact that we have and others have not—we should give, and in direct ways.”

Direct giving should be done locally, domestically. It can be a great tool for fighting domestic poverty under the current system and is of course a virtuous act.

But when it comes to international structures and relations and efforts that are impersonal and unjust to billions of people systematically, “direct personal giving” sadly often just perpetuates cycles of dependency, or at best treats the symptoms without treating the disease. I saw a video once about how donating old clothing actually keeps Zimbabwe in poverty, I wish I could find it online. We do live in a democracy, [First, if you live in the USA, that is not – strictly speaking – what “we” live in. Second, not everyone who participates in discussions here lives in the USA.] so we DO have a responsibility and the possibility of changing such systematic structures.

Distributism! Pope Leo XIII(Rerum Novarum) and Pope Pius XI(Quadragesimo Anno). I would love to read this holy fathers thoughts here. Also it seems unlikely he would break from the thoughts of his predecessors.

“Too much capitalism does not mean too many capitalists, but too few capitalists” – GK Chesterton

I am a nurse. I save lives for a living, I ensure the dying are offered a priest. I try to ensure that those dying do not die alone. I know this is probably not as economically productive as being a derivatives trader, but I guess I will just have to drag the economy down.

BTW you should care about the family above, because the Popes and your Faith tell you to.

And since I answered your question, perhaps you will answer mine, have you ever read Quadragesimo Anno? That is a much more relative point to the discussion than your occupation.

Derivatives MAY reduce volatility. Or may not. The may help stop famines and shortages. Or may help trigger them or worsen them. One thing we do know now is that a lot of derivatives traders thought they understood derivatives better than they actually did. Ignorance is not necessarily sinful, but it’s not necessarily free from responsibility, either.

I was responding to his post implying that if you are not a business owner or wage slave for a productive corporation, your opinion about Catholic economics should be ignored, or at least somehow your occupation should come into play.

Some fallacies I’ve noticed in the comments (especially by Jamie and Chirstopher Sarsfield)

1- Big Business is bad… So let’s use Big Government to beat up Big Business!

2- Someone should only make enough money before crossing some magical line into inherent greed. The mere accumulation of wealth = avarice.

3- People are incapable of acting virtuously without government tax credits.

4- Business are capable of acting ethically without government taxes and penalties.

5- The way the world is RIGHT NOW, is how it always will be. Monopolies never break up, new inventions never displace old gadgets. The poor have zero mobility. Some unethical people means that the entire system they operate in is unethical.

Catholics should embrace both truth and the Truth. I see some truly awful arguments on many posts. I don’t doubt your faith. I doubt your intellect and comprehension.

There is no way to devise blanket, government-managed entitlement programs that does not attack this element of human dignity. Government programs don’t have the ability to distinguish who is “blamelessly” needy, and who is poor through some fault or failing of their own. And in truth, it is contrary to the very ideology of such programs to try to make such distinctions. All needy people are addressed in exactly the same way — with a handout. For some, this might be the appropriate response. For others, this should rightly be viewed as a personal disgrace. But the implicit message behind such a program is “don’t worry about it. All that matters is that you’re fed.” A parish priest or a small, private neighborhood organization could exercise discernment, giving generously to the widow with six children who has no other means for support, and chastising the young able-bodied father who just needs to stop drinking so he can hold down a job. A government program glosses over all these distinctions. Responsibility doesn’t matter. Respect doesn’t matter. All that matters is earthly bread.

In a way, everyone is degraded by such a system, even the widows or orphans or others whom we might think deserving of aid. When the parish provides for them, this can be seen as an act of love, and an acknowledgement that their needs are legitimate and not a cause for shame. A check from the welfare office provides no such reassurance — it is an acknowledgement only of poverty. And when that status as “welfare recipient” is shared with drunkards and fornicators and people who are simply too lazy to look for work, it would be difficult for the virtuous person not to feel some shame, even if his misfortunes are genuinely not any fault of his own.

“I am a nurse. I save lives for a living, I ensure the dying are offered a priest. I try to ensure that those dying do not die alone. I know this is probably not as economically productive as being a derivatives trader, but I guess I will just have to drag the economy down.”
Excellent. A worthy profession. And apparently an increasingly lucrative one because of supply and demand. When I signed up for the military (many years ago) I too made far less than the derivatives trader, or the guy who did what I do now. I didn’t envy him his salary though.

“BTW you should care about the family above, because the Popes and your Faith tell you to.”
Depends on what you mean by “care about them”. Having done the long commute for many (15) years I don\’t find it particularly shocking or upsetting that other folks do it too. Now I can telecommute (thanks to the technological advances made possible via capitalism) but that effort was well worth it to me so that I could raise my children in the place I want to raise them.

“And since I answered your question, perhaps you will answer mine, have you ever read Quadragesimo Anno? That is a much more relative point to the discussion than your occupation.”
Yes, I have. And the Compendium. And Rerum Novarum. Many people who have read the social documents will not come to the same view of the best way to apply them. And we can legitimately differ on that. My question is relevant to the discussion only so far as it determines how seriously I should take the viewpoint of a specific party. I’ve spent way too much time over the years listening to the jawboning of well educated layabouts telling me the best way my resources should be allocated, usually to benefit their layabout status.

And to my question, are you assuming that the “designers” and “regulators” of your wondrous new system are free of original sin? Or are you just advocating a change in which specific group of sinful men hold power over us?

Avarice (from Latin avarus, “greedy”; “to crave”) is the inordinate love for riches. Its special malice, broadly speaking, lies in that it makes the getting and keeping of money, possessions, and the like, a purpose in itself to live for. It does not see that these things are valuable only as instruments for the conduct of a rational and harmonious life, due regard being paid of course to the special social condition in which one is placed. It is called a capital vice because it has as its object that for the gaining or holding of which many other sins are committed. It is more to be dreaded in that it often cloaks itself as a virtue, or insinuates itself under the pretext of making a decent provision for the future. In so far as avarice is an incentive to injustice in acquiring and retaining of wealth, it is frequently a grievous sin. In itself, however, and in so far as it implies simply an excessive desire of, or pleasure in, riches, it is commonly not a mortal sin.

Do you accept that definition.

3. Again you misunderstand me. Men are more likely to sin, if there is a natural punishment for not sinning and a natural reward to sin. This is common Catholic teaching, concerning how we can participate in another’s sin.

4. Again businesses are capable of acting ethically, but if the system is going to punish them for doing so, and reward them for not doing so, guess what percentage of business will act ethically. This is common sense.

5. The system we have now was predicted by Belloc and Chesterton years ago. They were right and your intellectual forefathers were wrong.

I will wait to reply to rest until you answer me about your acceptance of QUADRAGESIMO ANNO.

Yes, because the means of production (the “capital”) is concentrated in the hands of a few (the “capitalists”).

THAT is capitalism. And the capitalists have won your support by conflating that with the (basically good) concept of free markets in themselves and making “Capitalism” the good guy in a “cold war” against communism. It’s a trick!

“No way. For decades our global economy has been pushed and pulled by a variety of political forces- in peaceful ways (supposed regulation) and more violent methods (warlords, dictators)”

Political manipulation and interference BY the capitalists, by the controllers of the means of production and money.

But, hey, it’s their money, right? If they want to spend it on manipulating the market and the politicians are willing to accept such payment in exchange for helping them…isnt that their right? Wouldnt using State mechanisms to forbid such manipulation be just as much interference as using them to carry it out?

Your concerns are true, but they only make sense when still thinking inside the box.

If the social dividend had to be paid out of other people’s money through taxes or whatever, this welfare would definitely be parasitic and bad.

But the fact is, the country could issue a citizen dividend to all people without taking anything earned from wages or salaries, based on the national credit.

Even the drunken father has a right to life, doesnt need to “earn” his right to exist. God has given natural resources to all humanity, and we are all heirs to the progress of past generations. In the past 90% of people needed to work the fields to feed everyone. Now, less than 10% do. There is no particular need to create superfluous employment for the other 80% just for the sake of working them.

What such a dividend says is not that responsibility and respect dont matter, but that society takes responsibility for its role (and it is perhaps the greater part) of creating the person and who they are in the first place. We believe in free will, but the radically individualistic view of self-creation and internal agency that we have in America today is NOT Catholic. We have a very much communitarian view of the individual. They are in large part a product of society. Not totally, but in large part. Society has a responsibility for that.

So when Pius XI attacks the principles of liberalism ie captialism, is it your opinion that he did not know what those principles were, or he did not understand their compatibility with Catholicism? For example:

” 88. Attention must be given also to another matter that is closely connected with the foregoing. Just as the unity of human society cannot be founded on an opposition of classes, so also the right ordering of economic life cannot be left to a free competition of forces. For from this source, as from a poisoned spring, have originated and spread all the errors of individualist economic teaching. Destroying through forgetfulness or ignorance the social and moral character of economic life, it held that economic life must be considered and treated as altogether free from and independent of public authority, because in the market, i.e., in the free struggle of competitors, it would have a principle of self direction which governs it much more perfectly than would the intervention of any created intellect. But free competition, while justified and certainly useful provided it is kept within certain limits, clearly cannot direct economic life – a truth which the outcome of the application in practice of the tenets of this evil individualistic spirit has more than sufficiently demonstrated. Therefore, it is most necessary that economic life be again subjected to and governed by a true and effective directing principle. This function is one that the economic dictatorship which has recently displaced free competition can still less perform, since it is a headstrong power and a violent energy that, to benefit people, needs to be strongly curbed and wisely ruled. But it cannot curb and rule itself. Loftier and nobler principles – social justice and social charity – must, therefore, be sought whereby this dictatorship may be governed firmly and fully. Hence, the institutions themselves of peoples and, particularly those of all social life, ought to be penetrated with this justice, and it is most necessary that it be truly effective, that is, establish a juridical and social order which will, as it were, give form and shape to all economic life. Social charity, moreover, ought to be as the soul of this order, an order which public authority ought to be ever ready effectively to protect and defend.” QUADRAGESIMO ANNO

Many on this list seem to be doing exactly the opposite of this. As a Catholic should I listen to Novak or Pius? I know my answer.

You obviously have no more read my posts, than the Social Encyclicals. I have repeated decried big government and taxes. Unfortunately you like most Americans are not able to think beyond the American politics of liberals and conservatives/Democrats and Republicans. Anyone who disagrees with you must be a big government liberal, which is ironic because it is you that is the liberal, at least on economics. So you go about misrepresenting those who disagree with, and ascribing views to them they do not hold. Americanism is alive and well, unfortunately.

Feudalism is a less-centralized economy, and it doesn’t rely very much on money. Even if you accumulate a lot of property, it’s nearly worthless to you unless people live on it and unless you can protect it (and them) from vikings, rebellions, neighbors, etc. That is, as a system, feudalism doesn’t promote the mere accumulation or generation of wealth. Not that it was perfect, but there were more saints in the middle ages than today. People attended mass all the time, nearly all literate lay people kept at least part of the office. The medievals were more pious than we are, and I don’t think that economics, together with the rest of modernity, is blameless for our descent into the post Vatican II Church.

Flamma,

I presume you meant that the derivatives trader made $5,000,000 for the trader. Unless I’m mistaken, that’s a lot of wealth. If you desire that much wealth, even if there’s a multi-billion dollar corporation involved, that’s avarice.

Veritas,

“2- Someone should only make enough money before crossing some magical line into inherent greed. The mere accumulation of wealth = avarice.”

No, the inordinate desire for wealth is avarice. The accumulation of wealth isn’t avarice, unless you desire it in some ordinate way. If you accumulate a lot of wealth that is, as I said prior, probably good evidence of an inordinate desire for wealth. If the arrangement of an economic system encourages having an inordinate desire for wealth, then it’s promoting avarice.

Come on, why can’t you adequate your mind to the thing and realize that the issue is the inordinate desire of wealth?

In our current system, the dignity of man is slammed on both ends, being a slave to either the big business (capitalists) or the big government. Purely free markets, as pointed out by many prominent Catholics, reduces human beings down to a commodity while, on the other hand, the poor are enslaved to the check writing government so to become complaisant and grow to have little to no dignity because of the dependence on government.

Needless to say, a stronger, more robust Church is the cure for maybe all economic problems. As opposed to secular powers running the enslaving welfare program, the Church should be strong enough to take up that task to ensure that the needy are getting the monetary and spiritual development that is needed. It might be dreaming, but I would guess that if there truly was a need by a member in the Church, the local parish, diocese or greater community would come through to help while the helpee would do everything to repay the Church in the long-run. This way people wouldn’t have to be worried about being taken to task by big business either.

Secularist capitalists do not give a hoot about the spiritual welfare of man. They only care that people get off welfare, whether it be opening strip clubs, porn shops, selling drugs, whatever. This mentality is helping to breed a very strong sub-culture of self-glorifying hedonists that take pleasure in making money but detest the pleasure of work that goes into making it.

Another thing, capitalism, IMHO, hasn’t given the world any new uniqueness in culture. The great personalities, architecture and music of the world has yielded to modern things like rap music, office buildings and Bill Maher! (And of course His Pragmaticism Barack Obama) Free markets breed these lower forms because people will pay for their services. Hail the almighty dollar!

What we need is a strong identitied Church that is efficient at communicating its message so that it can grow in strength.

So in short, if we bring back the tridentine mass as the rule the economy would be much better off! (I’m only mildly kidding).

I think Mr. Novak is precisely right. Bjorn Lomborg also does a nice job describing the overall upward trend in his massively-footnoted Skeptical Environmentalist.

Mr. Sarsfield

You brought up the point of large Catholic families in stagnant local economies, and I see their problems, too. So far, my family is five. We’re doing well. Some of my friends’ families are seven, some eight. They struggle, but the fault isn’t “the system’s.” The fault is that they’ve made the decision to live somewhere that makes it really hard to maintain the same material standard as their friends’. Some small towns just don’t have the population to support a culture of local small businesses when the likes of Wal-Mart come in and offer the same goods at lower prices. Where will people go? Duh. But the problem isn’t elephantine Wal-Mart capitalism — it’s the failure of local economies to adapt to an environment full of elephants like Wal-Mart.

What’s the solution? More capitalism, not less. Declare Wal-Mart the winner in, say, canned goods and general hardware. They can realize economies of scale that mom and pop places just can’t. However, Wal-Mart can’t provide a whole range of services that moms and pops can, and Wal-Marts also aren’t very good at specializing even in a retail market. The stagnation we see is partly just a kind of stolid rebelliousness (fed by leftist class-envy crap) against something — instead of *creative adaptation.* Heck, wireless internet has made a cottage industry boom.

I don’t have time to engage in this thread, but I think the whole animus against “capitalism” comes in large part from a failure of people to think creatively for themselves. Economic conditions change. You have to stop being so docile and learn to *adapt*. Don’t be afraid!

Yes, everything I said is an ad hominem, and I clearly no nothing about the topic because I get my opinion from the Church. /sarcasm off/ I notice no one has quoted any Popes in support of the Capitalist opinion, I wonder why. Perhaps their too busy trying to defend their “poison spring” as Pius XI calls it. But I suppose he just used that language to hide his lack of understanding of the topic. As for Veritas putting his faith in his country instead of his Church on this matter I stand by it. [Settle down or this gets shut off.]

So much to respond to. I’ve been out with my kids all day.
In any case, on one point, I’ll note that economic growth is NOT a zero sum game. Mark is still concerned that the poor remain poor while wealthy folks get wealthier, allegedly, anyway. Let’s assume it’s true. If the poor are simply relying upon government transfer payments, which increase only minimally each year, then yes, their income will not rise as quickly as one who is working and achieving something, whether that working person be a janitor or a CEO. As for international disparities, as I (and others) said yesterday, one has to examine the conditions of the government and legal system as well as workers’ and property rights, plus the presence of expertise (ie, human capital) needed to move forward, in the developing nations. If the conditions in such a nation are unstable, unreliable or absent, then the poor nation will remain poor while the productive nations with the assets and stability to move forward will continue to do so. It’s not that complicated. Is it fair? I dunno. Much aid, private and public, go to developing nations from the developed world. [But I often read about bureaucratic complications which keep the help from reaching the people in need.]
–My background is an economist by training and practice (not PhD, however). I’ve worked to reduce govt regulation of telecoms in the US and other nations, as well as assisted developing nations in establishing open telecom markets and independent regulators. These nations often have some great intellectual capital ready to take on the tasks at hand. The political will is an issue. I’ve been home with our children for the past few years, doing some contractual work from home here and there. I look forward to reading this encyclical for further understanding of the Church’s view toward markets, business, labor, families, and the government’s role.

describes what Goldman Sachs has accomplished. WARNING. There are some vulgar comments but this is one of the best recapitulations of how The Banksters socialise loss and privatise profit.

Mr. Novak keeps referring to “The Market” without identifying it.

Is a market a place where identified goods and services may be viewed, examined, exchanged, and bartered, etc or is the “market” this miraculous and numinous non-place-space where some unidentified force ensures us that the assets have real objective value and that everything is Jake?

As for the Encyclicals themselves, how many have we had these past forty years? I am sure I am in the minority when I write that I feel as though we are being buried under paper.

Speaking just for myself, I wish the USCCB and The Pope would focus on cleaning-out the Augean Stable of internal Church problems, beginning with The Mass, instead of writing Encyclicals that nine Americans will read and then, after a fortnight of argument, ignore.

“What works better than capitalism?” is a question with equivocal terms. What is meant by “capitalism”? Is it Smith’s description of fact, or Friedman et al.’s prescriptive ideology? And, if the latter, during what period did the US qualify as capitalist? And, further, even answering that question does not address the flaws in Novak’s argument.

I do not expect you to respond to this, but I think you have slightly exaggerated with your post. You accuse me of “liberal use of ad hominem”, yet the only post you point to is directed at someone who consistently misrepresented me (and it is the only post you could possibly point to on this thread). And your post after that was beyond snarky. However, I think you are correct in not responding to me. I base my economic arguments on authority, and my authority is the Church through the Popes. In order to convince me I am wrong you would have to find Papal statements supporting your economic theories, and if we are being honest, you have no chance at that. You get your economic ideas from a bunch of non-Catholic/heretic/atheist people, I get my ideas from the Popes and people that the Popes have praised for their work defending Catholic Social Teaching against the people you get your economic ideas from. In eternity will see which one of us placed our trust in the correct authority.

“We live in a country where poor people are fat and
can afford to have multiple children because
someone else picks up the bill.” …Dymphna
You sound a little annoyed at those poor women who bring so many children into the world.

And this is precisely why white women abort. There is NO ONE to pick up the bill.Changes things a bit, doesn’t it, Dymphna?

Novak: “An accurate presentation of real existing capitalism requires at least three modest affirmations:
1) Markets work well only within a system of law, and only according to well-marked-out rules of the game; unregulated markets are a figment of imagination.”

Saying a thing is a figment of the imagination is beside the point, an attempt to paint it as ludicrous. Lots of everyday things were once figments of the imagination. The idea that markets work well only with regulation is simply what we had before Obama started actually taking over companies, a fascist regulatory control of privately owned businesses. Yes, rules of the game should be understood by all parties but they can be agreed upon on an individual basis and contracted for by the parties involved, the same with a “system of law”. It is now the case that our system of law has little to do with justice and fair play and is more about redistributing wealth to various special interests and voting blocs and who has “deep pockets” to pick. It’s time to take politics out of it and let folks decide who they want to deal with and agree upon their own rules of trade. The “system of law” seizes private property for special interests and does not even enforce contracts any longer, especially their own obligations. This “point” seems to me to be an attempt to make capitalism appear unworkable except when controlled by politicians, which is pretty much the same old government tyranny and looting.

Novak: “2) In actual capitalist practice, the love of creativity, invention, and groundbreaking enterprise are far more powerful than motives of greed.”

I’m not sure how Novak manages to look into the hearts of men and know their motivations but I’d have to disagree on this one. People usually have their own interests at heart. Even if they do claim unselfish motivations much evil is done by those with good intentions. Far better to remember the fallen nature of men, assume their motivations are to make a profit and they are acting in their own self interest. But that is the beauty of capitalism. Selfish motivations end up benefitting other people…unless they are able to pay off the state to bully for them.

Novak: “3) The fundamental systemic motive infusing the spirit of capitalism is the imperative to liberate the world’s poor from the premodern ubiquity of grinding poverty. This motive lay at the heart of Adam Smith’s important victory over Thomas Malthus concerning the coming affluence—rather than starvation—of the poor.”

Again, you can’t make a blanket generalization about the motives of people engaging in capitalist behavior. It is assumed they are trying to make a profit. I’m not sure why Novak feels the need to try to infuse capitalism with noble motivations. I’m sure there are some who want to help their fellow men by building a better mousetrap and that is great. But it’s naive to assume that all capitalists are, they are only human. Capitalists work to provide a product or service as cheaply as possible and innovators and competitors are constantly at work trying to do it better or differently in a free market. And that activity is what has the side benefits to the rest of the people. The capitalists can be profit seeking and this very behavior will benefit consumers.

3) The fundamental systemic motive infusing the spirit of capitalism is the imperative to liberate the world’s poor from the premodern ubiquity of grinding poverty.

I know Novak, a little, and I respect him and a lot of the work he has done. But I think this is a poorly considered phrase.

The fundamental systemic motive infusing capitalism is, in fact, the desire to profit. The effect, however, may well be/frequently has been, to liberate the world’s poor from grinding poverty.

It is hard to get a read on what line the new encyclical will take. It will not likely depart greatly from Centessimus Annus, but it may temper some of its praise for markets. Rocco Buttiglione will not be on the drafting committee this time around.

Father Z, by posting this article you have exposed the intellectual rot indemic in the Catholic Church today as evidenced by many of the posts here. These left-wingers actually are state-worshippers who dress up their personal beliefs in religious terms. Thanks. It’s been very enlightening. I guess they never heard of the cardinal sin of “envy.” Tom

Liam, you should be far more concerned with socialism and communism which definitely place the Church at the “back of the bus.” Capitalism doesn’t attempt to suppress the Church’s message like these “isms” do. In socialism and communism the State is supreme. Have you ever read “Quanta Cura?”
Tom

I read some of the concerns of the prior social/economic encyclicals as having great concern with completely unfettered markets. I understand that. The study of economics includes consideration of “market failures.” The professional field may not use the same language as the Church, but there is a recognition by many/most economists that some government role is necessary when there are market failures. The professional field also examines poverty, incomplete information for consumers/producers/other economic agents. It considers “unfair” business practices and anti-trust concerns. In practice, we are far afield from unfettered markets. Frankly there is too much regulation in some sectors, which if reduced would produce greater benefits for society. I don’t think we’ll be getting back there soon. So, don’t worry those who fear the unregulated market.

The basic study of economics is to describe simply what happens in a market. How various actions cause other responses in the market by players in the market. That is “positive” economics. To discuss what should be and place value judgments on an economic action/response is “normative” economics.

I thought I read a comment which asserted that people not working but receiving welfare checks were a product of capitalism. No, that’s a product of government intervention. Perhaps if the transfer payment were not available, the person would work.

Peggy,
As Belloc pointed out years ago, Capitalism always leads to a welfare state, because they can not let the have nots die of starvation. If they did the system would come down when the people rioted in the streets. Belloc predicted this, and he was right. You also know that in the US full employment is I think around 5% unemployment (is that still the ball park figure?). Once you get below that the economy suffers. If you are going to have a 5% perpetual unemployment in the best of times, you are going to have to come up with some system to assist them. That is what I meant by the welfare system being a product of capitalism. I do not know of any capitalist nation, that did not fulfill Belloc’s prediction.

Labyrinthus is right that private charity and the Church can tend to this matter. Didn’t the early mutual societies of laymen go toward that goal in the US early 20C about?

Further, 5% unemployment measures those who are seeking jobs and unemployment benefits. There is separately a now permanent dependent class that receives from one generation to the next subsistence from the government. They are not counted in the numbers of those who seek employment and receive unemployment benefits. But, private charity could tend to these folks as well and encourage them to become self-supporting as well. It’s such a deep problem now, however, that it would be an arduous undertaking that would be better for all in society in the long run.

Good to see you on here again. I’m pretty much staying out of this one as I never had a great desire to study economics and, sadly, I never got the opportunity to study Philosophy.

But you bring a fresh approach to this conversation. You seem to side with capitalism more because it seems to work better than, say, communism. I tend to agree although I don’t favour unrestricted capitalism and I strongly believe that any economic system is meant to serve man. Man is not meant to serve the economy. If the system doesn’t respect the dignity of every human being without exception it is to be corrected or, if necessary, replaced.

You have questioned yourself once or twice and had second thoughts as well. This you can afford to do because you are basing your points not on an ideology but on a good Christian value system.

I believe that the Holy Father is going to take a similar approach. I can’t see him getting into a socialist vs capitalist arguement. I expect him rather, to go for what works best and try to improve it according to Catholic principles. I expect a rebuke against greed is a given but will he be speaking about purely greed on the part of individuals or also of a systemic greed?

The one place in which I would be cautious about what you said is in your quoting the Gospel words, “The poor you will always have with you.” I hope you were not thinkng of that in any exegetical sense because it really doesn’t have anything to do with the poor at all.

On the 5% unemployment thing … how is it possible not to have some unemployment? Even in the best possible distributist economy businesses will fail, businesses will downsize, employees will quit, employees will get fired, technology will make some jobs obsolete, etc.. I’m not a fan of “capitalism” as presently understood, but I don’t think 5% unemployment is a bad thing.

No, the problem with capitalism is not unemployment, but underemployment, where men cannot find honest, meaningful work with decent pay that suits their talents and abilities, because so much of that work just doesn’t exist anymore. How do we bring these jobs back without creating even bigger problems? That’s the real question.

Jeff, we dont strictly speaking need to bring those jobs back. That is making man to be at the service of the economy instead of the economy at the service of man. It has made technological advancement a curse instead of a blessing. It is absurd that progress and plenty should be a “problem”.

90% of people used to need to work the fields to feed everyone. Now, thanks to technology, less than 10% need to do so. We dont need to create demand in order to make superfluous employment for the 80% “unemployed” by this progress.

Of course, many of those 80% now work in industry and such to create things that allow us to live a life beyond the mere subsistence that the 10% provide (ie, food).

But, at a certain point, thanks to technology, an ever shrinking subset of the population working will provide enough for everyone. To superfluously demand that everyone be “employed” as if that is an end in itself, is silly.

Some, faced with these paradoxes, might suggest limiting work hours or demanding early retirement, but that is really totalitarian state control and is unnecessary, and would stifle enterprise and drive. There is no need to tell people who do want to work that they shouldnt or can’t, especially when the current mechanism distribution works in such a way as to make work the only way to obtain.

But consider what social credit proposes:
“all members of society are co-capitalists of a real and immensely productive capital.

We said above, and we could never repeat it enough, that financial credit is, at birth, a property of all of society. It is so because it is based on the real credit, on the country’s production capacity. This production capacity is made up, certainly in part, of work, of the competence of those who take part in production. But it is mainly made up, in an ever-increasing part, of other elements which are the property of all.

There are, first of all, natural resources, which are not the production of any man; they are a gift from God, a free gift that must be at the service of all. There are also all the inventions made, developed, and transmitted from one generation to the next. It is the biggest production factor today. And no man can claim to be the only owner of this progress, which is the fruit of many generations.

No doubt that one needs men of our present times to make use of this progress — and they are entitled to a reward: they get it in remuneration: wages, salaries, etc. But a capitalist who does not personally take part in the industry where he invested his capital is entitled, just the same, to a share of the result, because of his capital.

Well, the biggest real capital of modern production is really the sum total of the discoveries, progressive inventions, which today give us more goods with less work. And since , all human beings are, on an equal basis, coheirs of this immense capital which is ever increasing, all are entitled to a share in the fruits of production.

The employee is entitled to this dividend and to his wage or salary. The unemployed person has no wage or salary, but is entitled to this dividend, which we call social, because it is the income from a social capital.”http://www.michaeljournal.org/soufin7.htm

Note that under social credit, this dividend would not be taken away from anyone else’s earnings (ie, tax funded “welfare”) but rather would be one of the means by which the new money created, debt-free, each year based on the national credit (ie, total real production) would be distributed.

It is funny that those who accuse me of seeing the economy as a zero-sum game (which I dont)…themselves seem to view the money-supply in a similar way (ie, are under the impression that to give money to some people you have to take it from others).

As technology allows more and more production with fewer and fewer work hours, the dividend will more and more replace wages, until someday we may live in a world where most people do not work since robots are doing all the production for us. And it should be for US. The great threat of capitalism is that this progress, which is all of our inheritence, will end up benefiting only the capitalists (ie, the “owners” of the robots) and leaving everyone else “unemployed” and in debt-slavery to the capitalists to get the goods that their machines are making.

I wonder if anyone here has read Thomas E. Woods, Jr.’s 2005 monograph, “The Church and the Market: A Catholic Defense of the Free Economy” from Lexington Books. It does answer a lot of the questions we’re all asking.

I must say these discussions seem meaningless to me, as long as european welfare states will continue to support masses of unemployed people who CAN work but DON’T of their own choosing. Anyone thinking that what we have now in the ‘West’ is capitalism, is living under an illusion. And it’s a shame so few of us can see it. We haven’t learnt from the horrors of post war communist regimes.

Our leaders still implement their policies, all the time pulling wool over our eyes with fancy slogans of ‘freedom’, ‘democeracy’ ‘equality’.

We would be much, much better off with less government interference in our lives.

As for ‘justice’., I have a question to fellow Readers:

Doesn’t the phrase ‘social justice; set off any alarm bells in your head? We either have justice or not? Something is either just or it isn’t. If ‘social justice’ is not the same as ‘justice’, then… it is not justice at all.

We are all different, we have different abilities, determination, qualities, talent. We even have differing levels of work we are prepared to put in. Therefore it is only right that our personal wealth isn;t the same, as some socialists and communists would have it. Why should I not get a better wage than the guy who sits in the house all day doing absolutely nothing productive at all(I do not count people who REALLY ARE seriously ill/sick, grievously harmed etc), especially that God has given me a few special talents that other people around don’t have?
Finally, we all know what happened to the Gospel servant who did not multiply the talents given to him by the master.
And howe do you think Christ supported Himself and the Apostles? Ok, they were fishermen, fair enough. But do you honestly think that He could travel all over Galilee with no place to stay at, eat at and sleep? Yes, my friends – patronage and help of wealthy friends did help to spread the Gospel. Wealth per se is no evil. (see Jesus’ visits at pharisee’s banquet and at the wedding of Cana)

As I recall, the concept stemmed from the political and moral arguments, first in 19th C. Europe, and later in the new world urban environments, where the “establishment” owned the businesses and fulfilled their legal obligations, but where great masses of people (men, women and children) were living in terrible conditions. The latter came to be called the “exploitation” of the masses by the capitalists (the owners). The “capitalists” did, in fact, live by the law for the most part, so it was frustrating for those who wanted to hang their demands for reform on some objective criterion, rather than pure political slogans, or raw and often violent power (revolution).

The concept of “social justice” was a kind of target of what laws should obtain to make it possible for the masses to have a somewhat better life. So the reforms proposed/enacted (child labor laws, days of rest, health regulations at the workplace, maximum work week, vacation time, etc.) came to be spoken of as “social justice”, a kind of goal indicating what “true justice” vs. status-quo justice, required.

It is not a denial of the nature of justice, but a kind of indicator of “meta-justice”, or philosophical notion, by which to think about, and judge, existing laws. A clear example of a “social justice” principle might be that “it should be illegal for children to work before the age of , unless it is on the family farm”.

To me, it is absurd to praise the “market.” It is not worthy of praise. It is a place where the life savings of hard-working blue-collar middle-American Christians were consumed by the wealthy and the greedy insiders and Banksters.

How many of us lost huge amounts of money in what we were told were “safe investments,” when in fact, those who managed our Mutual Funds were buying Bank-Bundled derivatives about whose intrinsic objective “market” value were NOT known because there was no “market” for them?

But, The Banksters knew the value of them. And the value of them was crap. And that is what our Mutual Fund Managers bought with our hard-earned money.

For every Bernie Madoff, there are, literally, thousands of Bankers and enabling Bureaucrats who ought also to be going to the slammer for the rest of their natural lives, but, instead, we hear irrational and unjustified praise for the capitalist system.

I still remember when Newt Gingrich, who bundled false promises as “The Contract with America,” ascended to the Speakership of the House.

What ws the FIRST thing he did? He took our money to bailout the Wall St Banksters who had made insane non-collateralised loans to Mexico.

Socialised Debt. Privatised Profit.

As he told investment Guru, James Dale Davidson, in the pages of Strategic Investment, (paraphrasing: we had to bail them out so they would let us do some of what we wanted to do.”

With the likes of Limbaugh and Hannity and Beck constantly yammering about the sacred free market system, no wonder people routinely praise the very system that is a machine for stealing our liberty, killing our culture,inflating fear, destroying our savings and, like the ancient wizards, causing our manufacturing base to evaporate into ether before our eyes while we, in response to this reality, applaud and chant, Free Market, Free Market, Free Market.

3) The fundamental systemic motive infusing the spirit of capitalism is the imperative to liberate the world’s poor from the premodern ubiquity of grinding poverty.

I know Novak, a little, and I respect him and a lot of the work he has done. But I think this is a poorly considered phrase.

The fundamental systemic motive infusing capitalism is, in fact, the desire to profit. The effect, however, may well be/frequently has been, to liberate the world’s poor from grinding poverty.

It is hard to get a read on what line the new encyclical will take. It will not likely depart greatly from Centessimus Annus, but it may temper some of its praise for markets. Rocco Buttiglione will not be on the drafting committee this time around.
Comment by Athelstane

Disgree. Capitalists commonly are interested in economic progress for everyone. That is why they have often promoted various population control programs–they consider “overpopulation” antithetical such progress.

Although capitalism is certainly driven by the profit motive, wealth in a monetarily driven economy is not a zero sum game (as it is in, say, a land economy). And so the wealth of one doesn’t necessarily mean the poverty of another. Such a misunderstanding of the fundamentals of the modern economy is, of course, one of the errors in Marxism.

The new commie tactic:
“I am not a commie BUT capitalism is evil, leads to inequality, blah, blah…” followed by a litany of commie cures/utopian planned schemes which the commie then claims are not communist. All very “rational” and “reasoned”and “magisterial”, of course.

Michael Novak may actually know what he’s talking about regarding the upcoming encyclical. A UK article says that his work was consulted by the Vatican…but so was George Soros and The Economist. But then the article is by Ruth Gledhill.

***This encyclical will be the first written with the help of Google. Theologians have done months of research on the internet to ensure the new document, likely to be among the most important and influential of the present papacy, is up to date with its economics as well as its theology. Reading material has included The Economist, George Soros and the philosopher Michael Novak.***

If I might add one point: Not only does the wealth of one not mean the poverty of another, but the wealth of one depends on the prosperity of another. Businesses only make money when there are customers.

I remember reading an article on EWTN years ago concerning a declassified document by Henry Kissinger, recommending population control for South America because if their population grew, and they were able to take advantage of their vast natural resources, they would become an economic rival to the US. So I question why population control programs would hurt real economical progress. Any ideas why they would say that? The same week there was also a report on the sterilization of 200,000 men in Peru without their knowledge funded by the US.

And here i am at work, with a job that is fulfilling and useful to society and which pays much more than i need, allowing me to more than tithe my gross income. I am sorry there are those who would consider me a “wage slave” because I am not, what? owning my own lab? on the dole? beach combing?

Some people need to stop categorizing everybody according to their small-mindedness.

It is not a new commie tactic it is quite old. It was even being used back in 1931. This is from the beginning of letter blasting capitalism:

“10. You know, Venerable Brethren and Beloved Children, and understand full well the wonderful teaching which has made the Encyclical, On the Condition of Workers, illustrious forever. The Supreme Pastor in this Letter, grieving that so large a portion of mankind should “live undeservedly in miserable and wretched conditions,”[9] took it upon himself with great courage to defend “the cause of the workers whom the present age had handed over, each alone and defenseless, to the inhumanity of employers and the unbridled greed of competitors.”[10] He sought no help from either Liberalism (Capitalism) or Socialism, for the one had proved that it was utterly unable to solve the social problem aright, and the other, proposing a remedy far worse than the evil itself, would have plunged human society into great dangers.”

Notice how the commie, attacks capitalism and then tries to cover up his true commie feelings by saying socialism would be worse! He even went on to write another letter later condemning Atheistic Communism. But that was just a ploy to further cover up the fact that he was really a …. Communist! Thankfully we have diligent people like you, to see through these crafty deceits and reveal the communists hiding behind Catholic Social Teachings. /sarcasm off/

it’s all very well, but… that is NOT how people understand ‘social justice’. Social justice for an average joe means: ‘let’s give these evil wealthy men a kick up ther backsides plus why does Wilson have a new Ferrari and I don’t type of attitude. For these people there is no correlation between work and profit – instead, the rich men ‘should’ ‘share’ their income with me, even though I’m too lazy to either requalify or get new skills or try to find a better job.
If there is no work here, find it somewhere else, get out of the house, move house if necessary, and you will find it. But no – the easiest option is to ‘take from the rich’.

I do appreciate the factthat there is a ‘system’ in which if you have no highly ranked friends it might be hard to get top or well paid jobs. But still, there is always an option.
It’s just that people get too comfy and they would like to be ‘guaranteed’ a cosy job for life. Well – not in a free, normal world folks, I’m afraid. And rightly so – we have a free will, so let us make good use of it.

Unfortunately, my feeling is that nowadays people would gladly give up their free will for beloved ‘safety’. Yes, let the government think for me, let THEM bring up my kids, let THEM tell me what to do, it’s easier that way, I won’t have to think for myself, as long as I have food on the table and my telly and my annual hols in Spain I’m all right.

Mark, I liked some of your points. All of them, to be honest, until I reached the last paragraphs of your post where you talk about social credit. I can see where you are coming from with this, though. I just don’t see how it can ever work.

But, The Banksters knew the value of them. And the value of them was crap. And that is what our Mutual Fund Managers bought with our hard-earned money.

Disgree. They were valuable but very risky because their value was only within the housing bubble.

For every Bernie Madoff, there are, literally, thousands of Bankers and enabling Bureaucrats who ought also to be going to the slammer for the rest of their natural lives, but, instead, we hear irrational and unjustified praise for the capitalist system.
Comment by I am not Spartacus

The current problems had two causes:

First, unnaturally low interest rates put people in houses they could not afford. When the market began to return to normal, the trip to fantasyland ended.

I remember reading an article on EWTN years ago concerning a declassified document by Henry Kissinger, recommending population control for South America because if their population grew, and they were able to take advantage of their vast natural resources, they would become an economic rival to the US.

1. I should have been more specific because I was referring to third world nations. Latin America is second world.

2. I don’t know anyone who considers Kissinger a capitalist. His interest is in (besides himself) geo-politics–he wants to preserve US hegemony in the Americas.

So I question why population control programs would hurt real economical progress. Any ideas why they would say that? The same week there was also a report on the sterilization of 200,000 men in Peru without their knowledge funded by the US.
Comment by Christopher Sarsfield

I never said that it would hurt economic progress. I said that many capitalists think that way. They are adherents of the Malthusian growth model.

There are demographers who have said that negative population growth produces economic problems.

The problem is not the Free Market itself. The problem is that FreE Market is NOT REALLY IMPLEMENTED.

World leaders regulate, regulate and regulate. And they bail out and squander cash. This is NOT free market at all, not even moderately.

There are, literally, thousands of free markets; one of them existing just a few miles away from me – “The Farmer’s Daughter” Market where I buy fresh veggies from Julie, a wonderful woman raising a handicapped adolescent.

THis market has a physical existence. I know and I trust the owner. I know what I am buying. I know where what I am buying came from and I know it was grown in Florida without the use of deadly chemicals.

Miles and miles away from me, in Immokalee, (close to where Ave Maria town is located) there was the Free Market Farm operated by Florida based, Ag-Mart. It used pesticides in such dangerous amounts that a pregnant woman (who was outrageously ordered to work in fields freshly painted with pesticide) gave birth to her baby and he was born without limbs.

But, The Banksters knew the value of them. And the value of them was crap. And that is what our Mutual Fund Managers bought with our hard-earned money.

Disgree. They were valuable but very risky because their value was only within the housing bubble.

Mr. Brown. I worked as a Mail Clerk for JP Morgan on Palm Beach in Fl. They practically invented this gambling tool.

I used to help set-up for these Confabs in which Morgan’s Free Market Honchos pitched risky derivative schemes to old money families.

The pitches were the perfect storm clouds of ephemeral rhetoric bursting over the heads of the formerly stolid and staid Trust Fund Babies. Their conservative moorings were swamped by sudden downpours of leverage this and they were swept out onto the seas of exotic “instruments” that and then, later, into the opium dens of the opaque gambling halls of the La Cosa Nostra Banksters where there really was a Free Market, in the sense that it was totally unregulated.

I used to ask our brilliant (and they were incredibly bright) young analysts what the value was of these “instruments” we were selling and how much did Morgan’s use of these “instruments” expose Morgan’s Trust Fund Babies to a sudden financial collapse if everything suddenly went south?

They were quite frank and honest. “Damned if I know.”

The fact is The Banksters did know they were selling crap – i.e. they were staging agitprop seminars to entice old money to be plopped down on the red of some enormous roulette wheel being spun by Sinatra’s Lady, Luck.

I was at Morgan when the President, the PRESIDENT, came to town and handed-out T-Shirts with red letters reading, “I ain’t Scairt” – as she extolled the magic of the market place and the incredible virtues of leverage.

As an indication of just how crazy a Free Market actually is (behind closed doors) you’d be hard=pressed to find a more revealing example.

I found the presentation hysterically funny but,as I looked around the room, I could see the various VPs were lapping-up this honeyed- poison like a dog lapping-up anti-freeze.

No. NOBODY knew what the heck these instruments of gambling were worth yet those charged with the fiduciary duty to protect the hard-earned savings of Joe the Plumber and Sally the Teacher, were boozing it up, laughing it up, whoring it up, snorting it up, and they used our retirement money to double down on a bet they had no business making; a bet that was, literally, illegal, until the very men now running our govt changed the laws in the middle of the night.

Are we at least through the worst of the credit default swaps falling apart? Nobody knows. A credit default swap is not a regulated document. There is no government reporting. As a result, there is no way to know how many of these are out there. The market is estimated to have a total value of 54 trillion dollars, so one tends to think we are not even close to being out of this mess.

“as long as european welfare states will continue to support masses of unemployed people who CAN work but DON’T of their own choosing.”

A puritanical attitude that doesnt make sense in a world where technological progress has made “employing” everyone superfluous and, frankly, unsustainable.

“Anyone thinking that what we have now in the ‘West’ is capitalism, is living under an illusion.”

No. It definitely is capitalism. Because the means of production (the “capital”) is concentrated in the hands of a few (the “capitalists”). That IS capitalism by definition, at least that is the capitalism I’m critiquing.

A relatively free market in itself isnt “capitalism” per se. I support a generally free market…but pragmatically, not ideologically.

“We would be much, much better off with less government interference in our lives.”

I agree.

“Why should I not get a better wage than the guy who sits in the house all day doing absolutely nothing productive at all(I do not count people who REALLY ARE seriously ill/sick, grievously harmed etc), especially that God has given me a few special talents that other people around don’t have?”

No one here is saying you shouldnt, if you mean what you say. NO ONE here is proposing any sort of collectivist pooling of all goods and then equal division and distribution or anything equivalent.

But merely “owning” a farm and its implements…is hardly a special talent. And going on vacation while minimally salaried employees actually do the hard manual labor…is also doing absolutely nothing productive.

Liam, thanks for the background on Michael Novak. I don’t recall hearing that long ago he dissented from the Church’s teaching on contraception, and it’s good to know that at least since 1989 he has been on record as affirming the Church’s teaching. Karen W. apparently brings up his past dissent on contraception, and his disagreement with the Holy See in the prudential matter of Iraq, where Catholics have the liberty to disagree, in order to suggest that his stance on capitalism and free markets is erroneous. That, of course, is an irrational argument. That he used to be wrong on contraception and may have been wrong about Iraq does not whatsoever to establish that he is wrong on economics. His economic stance must actually be engaged by those who disagree with him – red herrings about contraception and Iraq are diversionary tactics, attempts to change the subject.

Mark said: Billions of people live in slums. I do not think they are better off than, say, medieval serfs.

Until modern times, almost everybody lived in slums or their equivalent, but now most people do not. Is it your claim that if not for capitalism, almost everybody would be enjoying material prosperity?

Name a system that “has” raised people out of poverty?

Capitalism.

I couldnt do that, as since it’s existence capitalism hasnt given alternatives a chance to ever really be tried.

Yeah, socialists and communists are always saying that whenever people try their unworkable theories and find that they don’t work. “Well, that wasn’t really true socialism. Socialism just hasn’t been given a chance yet.” (And no, I’m not at all saying you’re a socialist — I see you advertise yourself as something of a distributist. I only note your comments here have been laced with socialist and Marxist shibboleths and point of view.) But the fact remains that different economic and social approaches have been tried over the centuries (feudalism, mercantilism, socialism/communism both national and international), and for all its faults, capitalism properly regulated is the one that has worked best, so far, and that has entailed fewer and less egregious violations of basic human rights.

Even communist nations have had to function externally as capitalists in the world market.

Well, perhaps we should all become communist, sacrificing billions of souls, just to see if communism works.

Also, as I said, the raising from poverty of some has entailed the pushing deeper into poverty of others, so compared to something like medieval feudalism, it might cancel out as a wash.

Rubbish. What you are claiming simply has not happened. Consider that before the modern age, most of the world was barely out of the Neolithic or Bronze Age level, and plenty of actual Stone Age cultures still existed. It’s unintelligible to complain that capitalistic approaches have so far only brought most of the world into Medieval and Renaissance levels of advancement and have not yet brought all the world into an Industrial stage. Whatever you’d like to blame capitalism for, you simply cannot establish that capitalism has pushed people from medieval standards of living back into the Neolithic – and that’s what we’d have to see if you were right that capitalism’s raising from poverty of “some” (i.e. billions of people) has entailed the pushing deeper into poverty of others.

As a British colony, America was ALREADY bourgeois. It rose to power so dramatically because it represents, in a nation, the rise of the capitalistic middle class. It’s bourgeois nature made it perfectly positioned, but it was ALREADY prosperous even before the Revolution etc, because of the middle class nature of its economy and founders.

Saying that America was “already bourgeois” is another way of saying it had “freedom and democracy” prior to its rise to unprecedented prosperity. I think you’re trying some sleight of hand to explain away how the U.S. had economic liberty before it soared to economic greatness. Claiming the English colonies were already prosperous is really begging the question of why they already had some degree of prosperity even before the U.S. was founded. It’s because they weren’t shackled down economically the way the European continent was. Claiming that freedom and democracies are luxuries of the rich and powerful amounts to making excuses for those cultures whose dictators are helping to keep most of the population in poverty and without opportunity to advance, all while the minority cream of the crop get to enjoy the fruits of the toil of the average laborer.

Perhaps one of the biggest problems is the definition itself. According to Merriam-Webster, “capitalism” is “an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market”

When you wrote that capitalism, by definition was that “the means of production (the “capital”) is concentrated in the hands of a few (the “capitalists”). “, it seemed to me to be closer to the definition of socialism

“Mark, I liked some of your points. All of them, to be honest, until I reached the last paragraphs of your post where you talk about social credit. I can see where you are coming from with this, though. I just don’t see how it can ever work.”

The only thing that is stopping it from working is lack of political will based on the enormous lobbying power of the private bankers against it.

All it would involve is the government issuing the same amount of money now issued by the Federal Reserve private baking system…except debt free.

Both increase the money supply as total production (and therefore number of exchanges needing to be facilitated) increases. But the banks do so at interest. They SELL us money they create out of nothing but the promise to pay it back (creating only the principle, however, not the interest, in an unsustainable spiral). That is unnatural and is truly usury. And so needless.

If the government simply increased the money supply fiat, interest free, as total production increased, and spent it into existence on public works, a citizen dividend, and a national discount to close the gap between purchasing power and prices…there would be no inflation, and all exchanges physically possible would simply be made financially possible.

The idea that “the government printing money leads to inflation” is only true in situations where the money is being arbitrarily (instead of according to a certain steady proportion with GDP) printed, or mainly when it is being done to retire old debts, in an escalating spiral of “paying one credit card off with another” essentially. Social Credit money, however, would be issued debt free for merely facilitating exchanges, not to retire old bonds through new debt or anything like that.

Consider the ridiculousness of the situation that sometimes happens. A factory makes tractors, no one is buying them. The farmer wants to farm food, but has no tractor. The employees of the factory want food, but the factory has nothing to pay them with.

Now, the situation is easy enough to solve in a small town; the people could barter. The factory could give the farmer a tractor, he could then farm food, give it to the factory as payment for the tractor, and the factory would give the food to its employees.

That is all that money is in end. It is for facilitating such exchanges, just on a much larger and more complex scale (such that there might be thousands of steps in the “circle of exchanges”). But is not a commodity in itself.

Instead of bartering, for example, we can imagine the mayor issuing money to the farmer interest-free. He could buy the tractor, the tractor company could pay its workers, and they could buy the food from the farmer, who could then pay back his debt.

This is not possible, however, if he is expected to pay back the principle PLUS interest, since a money supply loaned into existence at interest still only creates the principle, not the interest.

So if a private bank issued the money instead of the mayor, the farmer would have to also, in addition to paying back the principle in the cash, give the bank a share of his farm to pay back the interest. Plus there is the issue that the factory has to pay more than just wages to make the tractor, for example the raw materials. Though all that money winds up as someone’s wages eventually, it causes purchasing power to lag behind prices.

And so this parasitic fourth-party, who adds nothing to the process but the means of exchange that they create out of nothing…ends up amassing more and more of the capital through the debt they accept in payment for creating the means of exchange.

THAT is capitalism, and it doesnt work. It is ridiculous that the government should give the banks a monopoly on money creation and then borrow its own money from them…when it could simply issue its own money debt-free.

“Until modern times, almost everybody lived in slums or their equivalent, but now most people do not.”

No, they didnt.

Most people lived with their family in cottages on farms.

Now, admittedly, the cottages were small, the farms were owned by the lord, and they werent allowed to leave.

But they were NOT slums ala Johannesburg. They did not have the population density, the filth, the starvation, etc.

They got food for their work, the lord had certain reciprocal obligations to them based on tradition, and though they could not leave they also could not be sold as commodities (which is all wage-slavery is).

“Is it your claim that if not for capitalism, almost everybody would be enjoying material prosperity?”

Depends what you mean by “prosperity”. Not everyone would be enjoying an American lifestyle as of today, no. But most people could enjoy a lifestyle of around, say $7000 a year (give or take a few thousand), which is infinitely better than the lives many people live on only a few hundred dollars a year.

$7000 is the current world average based on total production divided by total population. Now, I dont propose leveling income so that everyone gets the average. Some might indeed have less, some might have more. But the gap would not have to be as large, no. That is caused by the concentration of capital in the hands of a few capitalists. Furthermore, such a situation would actually be much more productive so the average would rise even faster, and would raise all ships (instead of just making the rich richer and the poor poorer)

““I am not a commie BUT capitalism is evil, leads to inequality, blah, blah…” followed by a litany of commie cures/utopian planned schemes which the commie then claims are not communist. All very “rational” and “reasoned”and “magisterial”, of course.”

Latekate,

Please stop this, it’s becoming really insulting.

As I explained on the other thread, a better insult to hurl at us would honestly probably be Fascism. To call us Communists is just ridiculous.

Our critique of capitalism (the economic manifestation of Classical Liberalism) is a critique from the RIGHT, not the Left.

Our schemes are hardly “utopian”…but if you are going to notice an affinity between them and any ideology, it would be fascism, not communism.

Not everything anti-capitalist is Lefist, Communist, Socialist, Marxist, etc. The narrow American political spectrum may have many convinced otherwise, but you shouldnt be surprised to learn that there are ideologies to the RIGHT of capitalism. Not everything anti-capitalist is communist.

Now, I’m not a fascist either. Their nationalism, authoritarianism, and militarism disgust me and led to their downfall. But their economics were not communist, were not capitalist, and were often inspired by Catholic social teaching economic principles.

The Americanist Cold War propaganda has obviously indoctrinated you with a very emotional loyalty to capitalism and convinced you that anyone opposed to it must be one of those got-dang pinko commies. But, please, though you seem to be a McCarthyist in that regard, let’s not have a Red Scare.

That would be the “equivalent” to slums. Cottages, huts, crofts, and hovels is what they were. Some were tolerable dwellings, but on average they weren’t qualitatively different than slums.

Now, admittedly, the cottages were small, the farms were owned by the lord, and they werent allowed to leave. But they were NOT slums ala Johannesburg. They did not have the population density, the filth, the starvation, etc.

The farm plots were small too, and yes, they did have filth and starvation: famines and plagues were regular occurrences, and even the countryside would be affected. Birth rates were high but family sizes tended to be small or mid-range at best due to high infant mortality and high maternal death rates. I can tell you all about the average life of the peasant farmer, as I’ve been closely studying old parish records. The heart just breaks as you follow the mournful account of the monthly and annual tally of sickness, malnutrition, and early death.

They got food for their work, the lord had certain reciprocal obligations to them based on tradition

And at times the lord might even honor those obligations. . . .

Not everyone would be enjoying an American lifestyle as of today, no. But most people could enjoy a lifestyle of around, say $7000 a year (give or take a few thousand), which is infinitely better than the lives many people live on only a few hundred dollars a year.

“Could enjoy,” sure. But how are they to be enabled to have such a lifestyle without economic freedom, which you have said is only a luxury that wealthy and powerful nations can afford to give their people rather than a basic human right?

But the gap would not have to be as large, no. That is caused by the concentration of capital in the hands of a few capitalists.

Sorry, but this is just another of your tautologies. The vast gap we see today isn’t “caused” by the concentration of capital in the hands of few capitalists, but speaking of that concentration is just another way of saying there is a vast gap between the richest and the poorest. Saying that a few capitalists are super, super, super rich doesn’t explain at all how they got that way, and thus is of no help in moving us toward a remedy for that inequity.

Furthermore, such a situation would actually be much more productive so the average would rise even faster, and would raise all ships (instead of just making the rich richer and the poor poorer)

Or rather, instead of just making the rich unfathomably richer and the poor richer, as is actually the case.

“That would be the “equivalent” to slums. Cottages, huts, crofts, and hovels is what they were. Some were tolerable dwellings, but on average they weren’t qualitatively different than slums.”

Yes, they were. And are still inasmuch as both models still exist.

If you’ve ever been through Central America you notice a HUGE difference between the life of the poor small rural villagers, and the starving urban slum-dwellers living in garbage dumps.

“The farm plots were small too, and yes, they did have filth and starvation: famines and plagues were regular occurrences, and even the countryside would be affected. Birth rates were high but family sizes tended to be small or mid-range at best due to high infant mortality and high maternal death rates. I can tell you all about the average life of the peasant farmer, as I’ve been closely studying old parish records. The heart just breaks as you follow the mournful account of the monthly and annual tally of sickness, malnutrition, and early death.”

When? There was a difference between the Late Middle Ages and the early in these regards.

But even admitting that a lot of what you say is true, it doesnt really affect my point. One, because these same things about plagues and filth also applied to the richest in society. Even the lord had to wipe himself with his hand.

The fact is, they just didnt have the technology or medicine back then, so a lot of this stuff was natural and inevitable. But we DO have it now, so the fact that such conditions still exist is absurd.

“But how are they to be enabled to have such a lifestyle without economic freedom, which you have said is only a luxury that wealthy and powerful nations can afford to give their people rather than a basic human right?”

I dont see them as mutually exclusive. All nations could be wealthy enough to afford freedom from oppression and undue government control if the currently super-wealthy nations werent exploiting the currently poor ones (where the oppression tends to be).

“Sorry, but this is just another of your tautologies. The vast gap we see today isn’t “caused” by the concentration of capital in the hands of few capitalists, but speaking of that concentration is just another way of saying there is a vast gap between the richest and the poorest.”

“Saying that a few capitalists are super, super, super rich doesn’t explain at all how they got that way, and thus is of no help in moving us toward a remedy for that inequity.”

I have explained how they got that way. One way is through usury and the structures built around it. Privately created money based on debt, which tends to concentrate more and more capital in the hands of a few over time (ala the farmer-tractor example). This is then perpetuated and expanded by using their advantageous position to engage in unequal exchange with poor countries, such that, for example, we are able to “sell back” products to the countries that both make and consume them, and allow the sweatshop workers to get only 70 cents on a pair of shoes that the distributor sells for $35 dollars.

“Sorry, but this is just another of your tautologies. The vast gap we see today isn’t “caused” by the concentration of capital in the hands of few capitalists, but speaking of that concentration is just another way of saying there is a vast gap between the richest and the poorest.”

It’s not a tautology exactly, because the point is that the concentration of CAPITAL leads to a concentration of END-PRODUCTS.

So there is a causative process there. The controllers of the means of production, contributing nothing productive to the process except their (yes, state enforced) “ownership” of it…draw more and more wealth to themselves, and their nation (even among those who dont own the capital itself, ie their employees), while sucking it away from poor nations who actually do the work.

Ultimately my opposition is practical; I wouldnt care, as if on principle, that only a few people owned the capital…IF it led to a good distribution of end products. Which is what capitalism tries to convince people it can somehow achieve, through commonplaces like “rich capitalists trickle it down because they have to employ people”.

But really it cant effect fair distribution. If the capital (and, specifically, the power of money-creation itself) is concentrated in a few hands, the end-products will come to be too worldwide.

Have you ever seen slums? I have, and the medieval village of cottages does not come close. When I was stationed at Ft. Bliss in El Paso, I would drive to the mall, and you could look across the river and see the Mexican slums in the garbage dump, and the people looking for food and other items. This just did not happen under the feudal system.

With regard to Mr. Novak, I believe that problem with his Iraq war stance, was not only that he went to Rome and held conferences to argue his prudential opinion against Ratzinger and the Pope, but rather that he wanted the Church’s teaching on Just War principles to be changed to fit his country’s foreign policy. This is relevant because now he wants the the Church to change her Catholic Social Teachings in order to fit his country’s economic policies.

I would just like to add that I have a great deal of respect for many Libertarians. I read Lew Rockwell regularly. They have many areas of agreement with the Catholic Church, and I supported Ron Paul financially in the last election. However, Novak is not cut from the same cloth. He is a neo-con in every sense of the word, and his program has little in common with Catholicism.

Mark said: When? There was a difference between the Late Middle Ages and the early in these regards.

From the Middle Ages right up to modern times – feudal conditions and serfdom prevailed in large parts of Europe right up to and into the 20th century. (My study has concentrated on early modern peasantry in Eastern Europe.) Peasant life was always one of backbreaking toil and laden with disease and mortality. It was never idyllic, though it had its joys and pleasures as well.

The fact is, they just didnt have the technology or medicine back then, so a lot of this stuff was natural and inevitable. But we DO have it now, so the fact that such conditions still exist is absurd.

It is generally the case that such conditions still exist where families do not have economic freedom, and do not exist, or are much less severe, where they have such freedom. Our prosperous societies wouldn’t even have our beneficial technologies and medicines were it not for reasonable freedom in the areas of science and the economy.

All nations could be wealthy enough to afford freedom from oppression and undue government control if the currently super-wealthy nations werent exploiting the currently poor ones (where the oppression tends to be).

I reject out of hand the whole notion that freedom from oppression is something that some cultures cannot “afford.” Not all pre-modern cultures were tyrannies or dictatorships, even though they weren’t always prosperous.

Christopher Sarsfield said: Have you ever seen slums? I have, and the medieval village of cottages does not come close.

Not in person, but medieval villages often weren’t much different, especially during hard times, which were frequent.

When I was stationed at Ft. Bliss in El Paso, I would drive to the mall, and you could look across the river and see the Mexican slums in the garbage dump, and the people looking for food and other items. This just did not happen under the feudal system.

Sorry, but you’re just wrong. It certainly did happen under the feudal system.

With regard to Mr. Novak, I believe that problem with his Iraq war stance, was not only that he went to Rome and held conferences to argue his prudential opinion against Ratzinger and the Pope,

Nothing wrong with that at all.

but rather that he wanted the Church’s teaching on Just War principles to be changed

That’s probably not a problem either, since just war doctrine has developed and could develop further.

to fit his country’s foreign policy.

That would be a problem, unless current international conditions were the occasion to call for a refinement of just war doctrine.

This is relevant because now he wants the Church to change her Catholic Social Teachings in order to fit his country’s economic policies.

Does he really? I’m not sure if he is really a supporter of all, or even most, of the economic policies currently in force, or those that have prevailed over the past decade or two. Your comment doesn’t touch at all on Novak’s positions on economics, and you’ve failed to show how his positions on Iraq or just war doctrine have any relevance at all to demonstrating that his positions on economics are false or contradictory to Catholic social doctrine. That, of course, is because they have no relevance. Saying you think somebody is wrong about B does nothing to prove they are wrong about A.

As for libertarianism, it has far, far less areas of agreement with Catholic social doctrine than anything I’ve heard or read from Novak. Indeed, it is essentially irreconcilable with the Catholic faith.

But the economics, politics, and climate in Early Modern Eastern Europe is different than in the rest of the world, and I’m sure you know that generalizing from that to the rest of Europe during the so-called middle ages is a tad dangerous. The status and rights of peasants from one place or time to another varied considerably. So, even if being a peasant in Latvia was no better than being a slum dweller, being a peasant in northern Italy or Morebath, Devonshire tended to be considerably better than being a slum dweller, as Augustine Thompson, OP and Eamon Duffy point out. Also, a cottage with a thatch roof doesn’t compare to slum hovel or shanty. Thatch is a really good insulator and it does a good job of keeping the rain out.

The deeper question, more relevant to the issue of capitalism as such, is the organization of society. Should society be divided into classes of labor and bourgeoisie, on the principal that labor works but doesn’t own and the bourgeoise own but don’t work? Or into three ordines of laboratores, bellatores, and oratores? Capitalism is as much a rejection of the first estate (oratores, that is the clergy and especially monks) as it is of state control.

The advent in the USA of easy incorporation and the notion that corporate shares are not tethered to the value of hard assets only dates to the great wave of consolidations that began in the latter half of the 1860s. Before that time, incorporation was for a specific purpose and considered to have a specific lifespan, not indefinite, and was something of a discretionary grant by (mostly state) government. Corporations weren’t even recognized as persons under the federal constitution until the 1880s. This shift in the nature and and conception of corporations and corporate power begat in turn recourse to government. Market participants are also voters: to artificially separate those two modes is an error. Anyway, many people assume, wrongly, that “capitalism” necessarily entails the kind of corporations that developed after the US Civil.

And, surely, Mr. Novak knows that Larry Summers (and we all know who is now working for),incredibly, in public testimony under oath, fought against regulating the OTC Derivatives Market:

Once again, it is legitimate and valuable for Congress to consider whether it is necessary to make changes to the regulation of the entire OTC derivatives market. But I would note that it is not immediately obvious how either of these rationales applies in the case of the vast majority of OTC derivatives:

• first, the parties to these kinds of contract are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty insolvencies and most of which are already subject to basic safety and soundness regulation under existing banking and securities laws;

second, given the nature of the underlying assets involved — namely supplies of financial exchange and other financial instruments — there would seem to be little scope for market manipulation of the kind seen in traditional agricultural commodities, the supply of which is inherently limited and changeable

And as more and more wealth and power is concentrated in the hands of fewer and fewer folks and as The FED gains more and more power and has never been audited, we are told less regulation is the answer.

1- Reinvested in the company- growing employment and production
2- Paid EVERY EMPLOYEE a bonus- from the CEO to the secretaries- b/c we hit our ROE targets
3- Repurchased company stock- which raised our company share price, which increased the wealth of our shareholders- from banks, down to the lowliest online trader.

You are an owner of ExxonMobil? – Could you name 20 of your employees? Could you tell me the average wage of your employees? Could you tell me which divisions of your company make the most money? How many times have you spoken to your employees about their family life, and their goals for advancement in your company? I seriously doubt you own ExxomMobile, you are a speculator that is betting their stock will go up. You have no care about profits or costs or anything else a real owner would care about. You are just hoping you stock goes up.

As for locally owned ExxonMobil gas stations, they are great thing, and exactly the type of business that should be encouraged. I only wish that all the local guys would get together and buy out Exxon itself, so the Company would be employee owned, but there is no chance of that happening.

By the way if you were to tell the owner of the local Esxxon, that you owned ExxonMobil just like he is the owner of his gas station, he might not laugh in your face at that moment, if you were buying something, but I am sure he would have a good laugh when he got home.

You and I have a different understanding of real ownership. The gas station owner is committed to his business, he does not have the option to bail if he makes a profit but it does meet market expectations. Owners have a commitment that goes beyond financial consideration. I have a great deal of respect for owners. I have seen them not take a paycheck so their employee\’s could cash theirs in hard times. They work to make sure the business is a success. You on the other hand are a speculator, which LCB seems to think is an evil epitaph. However Websters gives this definition for to speculate:

to assume a business risk in hope of gain ; especially : to buy or sell in expectation of profiting from market fluctuations

As I said you are betting the stock goes up, and that is how you intend to make a profit. A real owner makes money from the profits of his business, and I do not believe for a moment you bought your stock for the dividend check. And the moment you are convinced the stock will no longer go up you are going to sell. A real owner could never run his business like that.

“If I need to buy a tractor from my neighbor and he lets me pay for it over 3 years, why is it any different if a bank acts in that role as financier?”

Because the banker loans money he doesnt have in the first place, based on the debt itself, and then expects the interest on top of that.

If banks were truly loaning from deposits, even at a moderate market-determined interest to cover opportunity loss and risk, it would be fine. But banks dont loan from deposits in the fractional reserve system. They privately create money, out of debt, at no risk to themselves or their depositors.

So…what are they except parasites?

“Is there a truly Catholic objection to these agreements?”

For most of them, no. The most suspect are things involving banks. I dont think anyone here is against a generally free market. We are against capitalism. They arent the same thing.

For all those detractors of Christopher Sarsfield: did you notice who the lay economist is who will be presenting the Pope’s encyclical along with the cardinals at the upcoming unveiling of Caritas in Veritate? You might want to do some research on Stefano Zamagni, the layman who will be given this extraordinary role (for a layman). I could be wrong, but I’m going to bet that Mr. Sarsfield will be a lot happier with this encyclical than will be Michael Novak.

“You are an owner of ExxonMobil? – Could you name 20 of your employees? Could you tell me the average wage of your employees? Could you tell me which divisions of your company make the most money? How many times have you spoken to your employees about their family life, and their goals for advancement in your company? I seriously doubt you own ExxomMobile, you are a speculator that is betting their stock will go up. You have no care about profits or costs or anything else a real owner would care about. You are just hoping you stock goes up.”

THANK YOU!!! Exactly, Christopher, exactly.

“As for locally owned ExxonMobil gas stations, they are great thing, and exactly the type of business that should be encouraged. I only wish that all the local guys would get together and buy out Exxon itself, so the Company would be employee owned, but there is no chance of that happening.”

Exactly!

“As I said you are betting the stock goes up, and that is how you intend to make a profit. A real owner makes money from the profits of his business, and I do not believe for a moment you bought your stock for the dividend check. And the moment you are convinced the stock will no longer go up you are going to sell. A real owner could never run his business like that.”

Exactly!!! THAT is capitalism, and THAT is why it will never work.

“corporate ownership is MORE dispersed among a wider set of people”

But not among people directly invested in those corporations, ie, the laborers or employees.

Some businesses are employee owned, and that’s wonderful.

But thanks to capitalistic speculation (ie, betting a stock’s value will go up based on a demand which itself is based on nothing but future expectation of demand based on nothing but a future expectation of demand, etc, ad infinitum) and a valuation of stock not tied in any way to dividends…most businesses are not employee owned.

Large shares are owned by capitalists with no personal involvement in them, and inasmuch as shares are owned by the middle class, they are for a wide array of companies that they are not personally related to, and so you have an odd form of selective-collectivism (so that a coke employee owns shares of pepsi, but a pepsi employee owns shares of coca-cola).

If I have a calf and my neighbor has 1 dozen eggs, can we trade together?

Yes you can trade together.

Is this situation made better or worse by government forcing my neighbor to give me 2 dozen eggs instead of 1 dozen?

The government should stay out of it.

If I need to buy a tractor from my neighbor and he lets me pay for it over 3 years, why is it any different if a bank acts in that role as financier?

It would be fine in both situations. However, both must know that if your farm fails or loses money they loose their investment. The tractor is a productive asset and you are hoping to make money from the tractor. They have right to take in interest some of the profit that tractor makes as well as the return of the principle of the loan. They do not however have a right to the money back with interest even if you loose money because then there is no risk, and they have no right to a return when there is no risk. However, when I borrow money I tend to pay the interest as rent, with an option to buy. So I need money for a tractor. I find someone to buy the tractor. I pay them 5-7% of the value to rent the tractor. Any money I pay above that goes toward ownership in the tractor. So next year when I pay the rent, I am entitled to some of the rent. This is how I bought my house, so I did not have to go to the banks. The owners are real owners. I take care of regular maintenance and we share the cost of major repairs based on the percentage of ownership.

If I worry about the cost of soybean feed rising in 2 years, can I purchase soybean futures from a bank to mitigate my price risk?

I do not know much about futures trading and how it works. I will put it this way. I am concerned with the cost of heating my house next winter. I have a company willing to sell me gas a todays prices. I buy the gas now and they “store” it until needed. That is fine. Sorry if this answer was less than helpful. If I were considering future trading I would go to my priest and friends that know more about this than I do and get their counsel.

That attitude of ownership severs the notions of labor and profit, and treats capital ownership as such as something to be rewarded. It encourages an artificial understanding of our relationship to the world.

Obviously, comments on a blog post are not the place to try to develop a fully Catholic theological anthropology with respect to work, but I’m fairly confident that the Bible, the Fathers, and the Doctors all treat work as an important part of being human. Economic well-being that comes from work is a good thing. I’m not aware of anyone who thinks that economic well-being that comes from someone else’s work is a good. That’s the problem with both owners and welfare recipients. They expect money without labor; just the owner happens to have capital. They share the same moral failure in their belief that they should be given money without doing labor.

With the growth of the internet and online trading and data tools…
corporate directors are MORE accountable to small investors

Thousands of Day Traders were wiped-out in the dot.com crash. They had been sucked in as the greater fools by all of the Cable News Shows with the whips, whistles, and balloons, pumping this that or the other thingy of no value. And the greater fools were constantly flattered that they now had the technology and so that companies were now more accountable to them, etc etc.

The Day Traders were the greater fools – just like those sucked-into the malestrom of Tulip Mania:

Enter the tulip. ”It is impossible to comprehend the tulip mania without understanding just how different tulips were from every other flower known to horticulturists in the 17th century,” says Dash. ”The colors they exhibited were more intense and more concentrated than those of ordinary plants.” Despite the outlandish prices commanded by rare bulbs, ordinary tulips were sold by the pound. Around 1630, however, a new type of tulip fancier appeared, lured by tales of fat profits. These ”florists,” or professional tulip traders, sought out flower lovers and speculators alike. But if the supply of tulip buyers grew quickly, the supply of bulbs did not. The tulip was a conspirator in the supply squeeze: It takes seven years to grow one from seed. And while bulbs can produce two or three clones, or ”offsets,” annually, the mother bulb only lasts a few years.

Bulb prices rose steadily throughout the 1630s, as ever more speculators wedged into the market. Weavers and farmers mortgaged whatever they could to raise cash to begin trading. In 1633, a farmhouse in Hoorn changed hands for three rare bulbs. By 1636 any tulip–even bulbs recently considered garbage–could be sold off, often for hundreds of guilders. A futures market for bulbs existed, and tulip traders could be found conducting their business in hundreds of Dutch taverns. Tulip mania reached its peak during the winter of 1636-37, when some bulbs were changing hands ten times in a day. The zenith came early that winter, at an auction to benefit seven orphans whose only asset was 70 fine tulips left by their father. One, a rare Violetten Admirael van Enkhuizen bulb that was about to split in two, sold for 5,200 guilders, the all-time record. All told, the flowers brought in nearly 53,000 guilders.

Soon after, the tulip market crashed utterly, spectacularly. It began in Haarlem, at a routine bulb auction when, for the first time, the greater fool refused to show up and pay. Within days, the panic had spread across the country. Despite the efforts of traders to prop up demand, the market for tulips evaporated. Flowers that had commanded 5,000 guilders a few weeks before now fetched one-hundredth that amount.

Your company may have had inside info about how the CDOs were just gambling chips, not investments, or it may have been just dumb luck that it unloaded that stuff onto some poor shmoes (and selling crap to others for a profit is fair or just?) before the bubble burst and those poor shmoes (maybe a mutual fund gambling with the retirement money of Fireman) ended-up being the greater fools but there was no way to rationally value the CDO pigs wearing lipstick.

“However, when I borrow money I tend to pay the interest as rent, with an option to buy. So I need money for a tractor. I find someone to buy the tractor. I pay them 5-7% of the value to rent the tractor. Any money I pay above that goes toward ownership in the tractor. So next year when I pay the rent, I am entitled to some of the rent. This is how I bought my house, so I did not have to go to the banks. The owners are real owners. I take care of regular maintenance and we share the cost of major repairs based on the percentage of ownership.”

Wow! That’s a really good idea. I’d never thought of that, but I like it!

“They share the same moral failure in their belief that they should be given money without doing labor.”

Not exactly. Believing that they should be given SOMEONE ELSE’S money without doing labor is wrong and parasitic.

But as the heirs to the nations God-given natural resources, and the progressive of innumerable past generations, people have the right to expect a social dividend, not “welfare” drawn from “taxes” on the wages of those who do choose to work, but based on the social credit.

Believing in work for work’s sake is puritanical idea. The Anglo-Protestant work-ethic is NOT the Catholic. Freeing people from labor for leisure more and more, and also from consumerist artificially fomented demand…would lead to more people dedicated to religion, art, family, relationships, and humanistic enrichment.

The purpose of technology is to maximize production while minimizing the need for input. As progress has lessened the need for labor to take care of everyone, as a smaller and smaller subset has become necessary to support the whole population, at a certain point it becomes superfluous to create demand in order to “employ” all the people.

That leads to consumerist decadence as well as a view of man as a commodity. And when being replaced by technology isnt seen as liberating the worker (as would be the case if he owned his own share in the factory where the robot replaced him), but rather as merely helping the capitalist who “owns” the means of production to be more efficient and pay less wages…that is seriously messed up.

Francis said: “I don’t think we should worry about the encyclical no matter what comes out. The Holy Spirit will ensure that it contains nothing against the Faith or morality”.

Come on Francis, do you really think that the big issue here is concern as to whether the encyclical contains anything against faith or morality?

There seems to be a tendency in America to bundle together freedom, capitalism and Americanism in one package and to consider that package as being an exceptional piece of God’s handiwork. It is this attitude which is the biggest problem. Such people will feel threatened and junderstandably so and, as a result, less able or willing to think.

If the encyclical seems critical of capitalism, the fact that it was written by the Pope (and our favourite Pope at that) won’t stop such people from coming out, guns-a-blazzing, to protect their sanctified turf.

Comment by Mark — 1 July 2009 @ 4:29 pm
…If banks were truly loaning from deposits, even at a moderate market-determined interest to cover opportunity loss and risk, it would be fine. But banks dont loan from deposits in the fractional reserve system. They privately create money, out of debt, at no risk to themselves or their depositors.

Mark,

Yes, they do. In the fractional reserve system, they don’t make every loan out of capital, but they do “have the money”, whether capital or deposits. Where else does the “money” come from?

You really need to study the facts, in order to distinguish between facts, myths, and abuses as you read about them in the papers.

The “fractional” adjective means that there is “capital” and all-the-rest. The fraction is the percentage of total liabilities represented by capital (think of it as “seed money”). That’s a definition, not an opinion.

When a bank is not regulated (as in the US for a very long time), there is no theoretical limit as to how much in loans they can make. Let’s say a bank has $10 of capital for every $100 of “footings” or “total liabilities”. It’s capital ratio is 10%. Definitionally then, its leverage is 10X. When a bank is not regulated (as the “wildcat banks” of the American past), their leverage could go to any value: 20X, 100X, 1000X, which meant that there was no way to limit the “systemic risk”. Regulated banks are required to maintain their leverage ratio at a value <= the required leverage ratio. If the ratio is 10X, then they must have at least $10 for every $100 of liabilities. Beyond that, and the FDIC will shut them down.

That being the case, your first sentence actually says something like: “Nevermind!”

Do they have risk? They have various risks. If they make no loans/investments they cannot pay either the depositors or themselves. If a depositor “cashes in” they must find other depositors, call in their loans, or borrow the money from other banks through the Fed System. If a borrower defaults, they have a whole other bunch of risks, included going bust.

Senior bank managers are paid to watch over those various risks, and when the signs start to look bad, to rein them in.

Before criticizing the banking system, you need to know these details about banks (and they are all available in Finance 101 textbooks). Otherwise you sound like a lunatic: some critiques sound right, some sound ridiculous, but on the whole, it all sounds pretty RANDOM.

“Yes, they do. In the fractional reserve system, they don’t make every loan out of capital, but they do “have the money”, whether capital or deposits. Where else does the “money” come from?”

Money is only credit. It is loaned into existence based purely on the promise to pay backed up by collateral.

The money for a mortgage, for example, comes from the value of the house you are trying to buy itself. The value that the house represents is turned, in the form of private credit, into the loan money, and the government agrees to enforce this for the banking system.

The total money supply is thus based on the total amount of debt, it is the value of the REAL wealth of the nation, wealth that has (for the most part) been mortgaged into the banker’s hands in exchange for liquid finance.

But on the same principle, the government could issue new money each year based on the new value of the new production that year, as social credit instead of private credit. And the government could issue it debt free! The new money could be spent into existence by the government, interest free, to represent the new wealth that year and facilitate the exchange of it, without putting it in hock in the process.

“Do they have risk? They have various risks. If they make no loans/investments they cannot pay either the depositors or themselves. If a depositor “cashes in” they must find other depositors, call in their loans, or borrow the money from other banks through the Fed System. If a borrower defaults, they have a whole other bunch of risks, included going bust.”

Granted, but being able to only loan a certain amount of money into existence based on an artificial legal ratio pegged to deposits, and “risking” their ability to loan as much if they lose depositors because they are not producing a satisfactory return…is different than actually loaning from deposits or risking being able to actually pay back those deposits. At worst, they break even.

But, this time not to distort and distend the Just War Doctrine, rather to misrepresent Pope St. John Paul II and, by the extension, the Church as believers in Capitalism . . . and, free markets. . . and, entrepreneurship . . . and, tax cuts!

As I warned in another place, my “theocon” friends: Learn the lessons of the Catholic Sillonists!

“The money for a mortgage, for example, comes from the value of the house you are trying to buy itself.”

Were that true, we could solve all real housing problems by simply building more houses! They would literally “pay for themselves”! Relative to buyers, they would be free!

Assume a house. Assume someone owns it (otherwise, I can just squat on it). Assume I want to buy it. Assume the owner might be willing to sell it. (Freedom all around.) How do I decide how much to pay for it? (Please keep it simple, and as free of theories as you possibly can!)

Matthew W. I. Dunn, it’s not as if it is possible to substantiate the belief that Pope John Paul II (let’s leave it to the Holy See to canonise him) and the Church are dead set against capitalism, free markets, entrepreneurship, and tax cuts.

Lindsay said “I can’t really see that giving leisure to more people has done a lot to improve culture in the Western world.”

LOL. You must have missed the day in class when they taught about a little segment in world history called the Renaissance. One of the main factors in the Renaissance begining in Italy from while the rest of Europe was still languishing in the Medeaval period was precisely due to people having more leisure time. The rise of the city-states brought stability to central Italy, which allowed for more leisure time to employee better technological advances in farming methods (instead of merely for subsistance) bringing about food surplusses which fueled a commerce economy triggering disposable income and the rise of the middle class. Leisure time freed entire populations from the land and allowed their descendants to join guilds, schools, commercial adventures and other institutions which were previously off limmits to people farming at a subsistance level.

Take away leisure time and you take away innovation AND a populace with a will. The Communists knew this, which is why it is modus operandi to starve their population after coming into power (as in the Soviet Union, China, Cambodia, Ethiopia etc).

not Spartacus>”Flamma. I assume you read the information at the links I sourced to back-up my claims so I find your response incomprehensible.”

notSpartacus, I went to your first link there and found it filled with ideological nonsense. Nothing convincing to support your position. Perhaps you could be a little more specific.

Capitalism is obviously the best economic system witnessed so far for those paying attention. It has increased the wealth of millions in a way unprecedented in history. Those who talk down capitalism have yet to name a better system.

Mark said: Capitalists love state control when it suits them. Such as how they use the State to enforce their “ownership” of the profit of other people’s labor.

Marxist rubbish. Under Catholic social doctrine, that is one of the roles proper to the State. Respect for private property and for the rule of law is NOT state control of the economy, is not socialism. If we take your words as written, then business owners don’t own the money they earn through the profit of other people’s labor. You’re advocating out and out theft.

You’re very muddled in your thinking, Mark. You’re going to have to decide whether you want to be distributist or a Marxist. You definitely talk more like a Marxist than a distributist.

“Were that true, we could solve all real housing problems by simply building more houses! They would literally “pay for themselves”! Relative to buyers, they would be free!”

It’s a little more complicated, but you are closer to the truth than you think even though you are trying to be sarcastic.

What is physically possible, the government could make financially possible, debt-free.

If the construction of all those houses was physically possible, and there was demand for them…this exchange merely needs to be financially facilitated. The government would simply need to close the gap between prices and the “lag” of purchasing power.

New wealth really does pay for itself, that’s the whole point, it is new wealth. The only complicated part is liquidating it.

If all the mortgages were canceled, if we were told tomorrow that we all didnt have to pay back the loans for our houses…the houses would still be there! And the contractor or previous owner would still have their money. They only people who would “lose” anything would be the banker, who simply created that money based on the debt in the first place.

“Respect for private property and for the rule of law is NOT state control of the economy, is not socialism. If we take your words as written, then business owners don’t own the money they earn through the profit of other people’s labor. You’re advocating out and out theft.”

Taking the earnings of other people’s labor is the theft.

I dont advocate forced redistribution though, even though I think much of the wealth and concentrated capital that the capitalist have obtained has been obtained through such theft.

But forced redistribution would disrupt things too much and be politically unfeasible. Social Credit would cause the redistribution to happen naturally overtime by removing the capitalists’ dishonest instruments for taking the wealth produced by other people’s work.

“The Christian churches and sects did not fight socialism. Step by step they accepted its essential political and social ideas. Today they are, with but few exceptions, outspoken in rejecting capitalism and advocating either socialism or interventionist policies which must inevitably result in the establishment of socialism. But, of course, no Christian church can ever acquiesce in a brand of socialism which is hostile to Christianity and aims at its suppression. The churches are implacably opposed to the anti-Christian aspects of Marxism. They try to distinguish between their own program of social reform and the Marxian program. The inherent viciousness of Marxism they consider to be its materialism and atheism.”
Ludwig von Mises, Theory and History, pg. 150

While Nassim Taleb speaks of people being fooled by randomness, here we see people fooled by Marxism.

Comment by MPM: “Cheap shot. Canadians know all that anyone could ever need to know about Americans.
After all, they used to be Americans, right.

And they cannot critique Canadianism, becaue of their Human Rights Commission!”

No it is not a cheap shot! We don’t know all there is to know about Americans but as a rule we do know far more about Americans than Americans know about us.

No! We were never Americans! Where ever did you get that idea?

The human Rights Commissions (however did you latch onto them?)in some of the provinces are accused by some people of being ridiculously politically correct and being in need of reform but that has nothing to do with any freedom to criticise our country or governments. Those Commissions would be much more concerned if you offended a Lesbian.

We Canadians are much more laid back about our patriotism than are you Americans e.g. we don’t hang flags in front of our houses, we have no equivalent to “un-American” or “the American way” and those are very small examples.

In short, I don’t really know what you mean by “critiquing Canadianism”.

Mark, you’re pretty obviously chomping at the bit to be one of those folks that doesn’t have to work “unnecessarily” and sit around living off the social credit. I’m guessing you’re pretty young? Not too crazy about the idea of working for a living? When are you going to break out the “read Pieper’s book about Leisure” line that all the liberal arts/great books degreed youngsters like to try?

I am compelled to bother and wade in again, against my better judgment. Reader Mark has rejected EVERY possibility and has rejected empirical evidence to the positive effects of capitalism and largely free markets on human society. Mark, your bottom line is apparently to be offended by the idea that, maybe my husband and I have some extra capital from our own earnings and work–or even inheritance. We provide for our family, meet our expenses, support our parish and various charities, but still there is more. We have a neighbor with skill and interest in painting homes, but he doesn’t have enough equipment or a truck, or an office. Suppose we lend him some of our capital, with an expectation of a return on that investment. So, we take advantage of the painter who develops his business, supports his family and pays us back with interest earned. He could not have done it without our (or some one else’s) capital. We don’t deserve a reward. So, a step further, suppose the painter hires a secretary and assistant painter. Now, my huz and I won’t get any more than the agreed return. We are evil for that alone, according to Mark. Further, if our painter-owner dares to hire a guy and pays him a just wage, our painter friend is evil as well for enjoying “profits” from the labor of the assistant. The idea that labor alone is entitled to the profits from their work (which they would not have without the injection of capital) is PURELY A MARXIST IDEA. Mark has also put forth the idea that he’d be happiest if workers owned their companies (which many employees at all levels of skill do thanks to 401(k)s).

Mark, when I asked for a better system than capitalism I meant one that is either in place and functioning now or has been successfully demonstrated in the real world to actually work better than capitalism.

Capitalism has increased the wealth of average citizens hugely.

Distributism is a theory unless you accept the \\\”middle ages\\\” example…which is less than convincing and hardly compelling.

Watch the ad hominem about Mark. LCB gets particularly offended by them, unless of course he is only offended when they come from someone that gets their economic thoughts from the Church. [Settle down.]

With regard to what you posted to Mark, you can invest in the painting business and demand a portion of the profits for interest on your money, but the risk involved comes if the painting business makes no money, you have no claim to interest or the principle, because what you invested in never made money.

With regard to owners having employees the Church is clear on that, and they say you can and can make a profit off that. Pius XI condemning the Marxists that have influenced workers:

\”55. And therefore, to the harassed workers there have come \”intellectuals,\” as they are called, setting up in opposition to a fictitious law the equally fictitious moral principle that all products and profits, save only enough to repair and renew capital, belong by very right to the workers. This error, much more specious than that of certain of the Socialists who hold that whatever serves to produce goods ought to be transferred to the State, or, as they say \”socialized,\” is consequently all the more dangerous and the more apt to deceive the unwary. It is an alluring poison which many have eagerly drunk whom open Socialism had not been able to deceive.\” Quadragesimo Anno

Not that most on this list care what the Pope\’s say, [Settle down… really.] they have Von Mises and Hayek, who needs Popes, but I did think you might want to know Pius XI clearly and authoritatively backs you up on this point.

You obviously have not read Belloc or Chesterton. Read the Servile State by Belloc, he predicts where the capitalism of his day would lead. Everyone enslaved. Most enslaved to an employer with no productive wealth, and the rest enslaved to the government by means of the dole. Everything they said has come true. Unlike Adam Smith’s prediction that Capitalism would lead to a well distributed economy, without any great concentrations of public wealth.

“Everything they said has come true.”
You must be living in a very isolated world, the average man is far more prosperous than he was at the time of Belloc, and Chesteron – their predictions about the results of capitalism are deservedly in the dustbin of history’s bad theories.

“Unlike Adam Smith’s prediction that Capitalism would lead to a well distributed economy, without any great concentrations of public wealth.”
Adam Smith never made that prediction, he stated, though, that capitalism would be a bounty for the poorer classes, and it has hitherto. The victory of economic liberalism against the Corn Laws alone displayed Smith’s point.

Thank you for the reference to Pius XI. It is important to see that the Church did understand what was meant by Marxism and also recognized the dangers involved.

On my example, yes, of course, if the painter’s business failed, we aren’t likely to see our return. That’s investing…but if it were a loan, well, the bankruptcy courts would sort that out, but no guarantee of principle or return either. What the Marxists fail to understand is that capital is but one component of production: labor and raw materials are the other two. Partnerships are made of the combination of these resources to benefit all partners in appropriate proportions satisfactory to each one.

I am sorry to hear that Mark might not like the official name for the social-economic thought he espouses to be applied to him. That’s usually how such things work, in my experience. ;^D

“Mark, you’re pretty obviously chomping at the bit to be one of those folks that doesn’t have to work “unnecessarily” and sit around living off the social credit.”

No, I would still work. But I would be able to do so without feeling like a commodity and without feeling like I “had to” with the threat of starvation and homelessness being hung over my head.

The social dividend is liberating in that regard, and remember it would only be as big as total production each year allowed. If all sorts of people retired to live off it, it would go down, and that new standard would not be acceptable to some people, so they’d go back to work, and there is a very free market equilibrium found in that.

“the average man is far more prosperous than he was at the time of Belloc, and Chesteron”

But the “average” man doesnt exist, that is capitalism’s problem. The average is made by putting one incredibly rich person (indeed richer than anyone has ever been) together with one incredibly poor slum dweller (worse off than any human has ever been) and then dividing by two. That “average” may be rising, but only because the rich are getting rich at a somewhat faster rate than the poor are getting poorer. But the poor are still getting poorer.

“With regard to what you posted to Mark, you can invest in the painting business and demand a portion of the profits for interest on your money, but the risk involved comes if the painting business makes no money, you have no claim to interest or the principle, because what you invested in never made money.”

Exactly, such an investment has to involve real risk. You dont get to confiscate assets to make up your principle, let alone your interest. You can take whatever percent you own, even if in the end that is less than what you put in, and you have no right to expect any more than that.

“With regard to owners having employees the Church is clear on that, and they say you can and can make a profit off that.”

But only if the reason you own the means of production in the first place, instead of the employees themselves (the theoretical, but not necessarily always required, ideal)…for HONEST reasons. Most capitalists dont. They own the capital instead of the employees because of usury and unequal exchange very often. And so they are essentially stealing the profit of another’s labor.

But, for example, your “real owner” of a gas station or other small business would certainly be allowed to, I totally admit that. Your painter example is fine, but is not analogous to how the system works large-scale.

I do NOT hold that only labor is entitled to the profit. Capital does to, yes, but it must be capital held honestly (lots is the result of usury and unequal exchange), and the ideal to strive for (but not absolutely required) is labor itself coming to own the capital they use.

“Reader Mark has rejected EVERY possibility and has rejected empirical evidence to the positive effects of capitalism and largely free markets on human society.”

Capitalism, yes, I reject. Free markets, no, I admit. Largely free markets are fine, if they do not allow unnatural practices like usury, privately created debt-money, etc

***But only if the reason you own the means of production in the first place, instead of the employees themselves (the theoretical, but not necessarily always required, ideal)…for HONEST reasons. Most capitalists dont. They own the capital instead of the employees because of usury and unequal exchange very often. And so they are essentially stealing the profit of another’s labor.***

So, if we put that capital into a publicly traded company, it’s different? That’s not “honest”? “Unequal exchange” of what? It’s moral to you that employees don’t have ownership in a small business, but in a large-publicly traded company, it’s immoral that employees don’t have ownership? Funny thing is that large publicly traded are those which offer ownership through ESOP plans and 401(k)s. [Although a small private firm I worked for offered ALL employees (and only employees) an opportunity to own stock. I took them up on it.]

So, you don’t like publicly-traded entities? The stock market system? You think it’s dishonest inherently? And somehow people like, say my hus and I, have through our own labors capital to invest and it’s dishonest, and the employees of whatever company we invest in are robbed of the fruits of their labors by us and other investors…?????

No, I dont think it’s a question of small business vs publicly traded.

But there are questions about publicly trade companies.

If people are basing the value of the shares of dividends, that’s possibly fine, but most people arent, they’re speculating.

Also, employees have stock, but is it a share equivalent to their job, their contribution? Namely, would it be enough to support them if their share of the company (ie, their job) was filled by a robot instead of them?

I’m not against, on principle, people investing the money they’ve earned in a company and so getting a share of the profit (though if the company, as ideal, is owned by the employees…I dont see what is left to sell the public). However, our current money system is wrong, so investing with Federal Reserve debt-money has totally different implications than investing with Social Credit free money.

“‘the average man is far more prosperous than he was at the time of Belloc, and Chesteron’

But the ‘average’ man doesnt exist, that is capitalism’s problem. The average is made by putting one incredibly rich person (indeed richer than anyone has ever been) together with one incredibly poor slum dweller (worse off than any human has ever been) and then dividing by two. That “average” may be rising, but only because the rich are getting rich at a somewhat faster rate than the poor are getting poorer. But the poor are still getting poorer.”
Sheer Marxist ignorance, there is not a single correct comment in your post. Even the most incredibly poor man has been yanked up from obscene poverty by capitalism, and you are completely blind to that.

“I do NOT hold that only labor is entitled to the profit. Capital does to, yes, but it must be capital held honestly (lots is the result of usury and unequal exchange), and the ideal to strive for (but not absolutely required) is labor itself coming to own the capital they use.”
Mark desires the luxury of the dictator who gets to decide for other individuals if their exchange in equal.

Again most posting on this thread clearly could care less what the Pope has to say on these matters, after all economics is science, etc. But the Holy Father did condemn again usury and and thanked the Italian National Anti-Usury Council for their efforts in this area (I am awaiting LateKate’s investigation, which I am sure will reveal them to be … communists!).

THE STATE MUST SUPPORT VICTIMS OF USURY

VATICAN CITY, 1 JUL 2009 (VIS) – Among his greetings at the end of the general audience, celebrated this morning in St. Peter’s Square, the Pope addressed representatives of the Italian National Anti-Usury Council, whom he thanked for the “important and much appreciated work you carry our with victims of this social blight.

“My hope”, he added, “is that there be a renewed commitment on everyone’s part effectively to combat the devastating phenomenon of usury and extortion, which constitutes a humiliating form of slavery. On the part of the State may there be no lack of appropriate aid and support for families in difficulties who find the courage to denounce those who take advantage of their often tragic situation”.

I will produce the author’s summary of the article by the Austrian Economist:

***Begin Quote***

Men naturally seek direct access to the means of subsistence, usually in the form of their own land or tools.

This access makes a man less dependent on his neighbors and therefore less dependent on the markets.

But capitalism is the condition of dependence on the market for one’s very subsistence. Therefore, “the fundamental condition for the existence of a capitalist order is the absence of the individual autonomy in the sense of owing the source of your food,” and of forcing people to seek a monetary source of subsistence. This is not a natural condition, as is owning one’s own land, because “People do not search instinctively for a source of monetary revenue.” They do so only because they are forced to do so.

“Capitalism is made possible only if this natural process is interrupted by an instrument that makes sure nobody could have access to food and shelter unless a monetary revenue is used as an intermediary.”

“Therefore, the capitalist order is not natural. Such an order can be maintained only if there is an institutional arrangement which prevents the individual from not engaging in commercial relations through the agency of money.”

That “institutional arrangement” is a government that requires people to pay taxes and fees only in the form of money. Only the state can perform this coercive function upon which capitalism depends. “The source of the revenue gets prominence over the source of food; the commercial relations are widespread because, basically, it is impossible to avoid them.”

The state is necessary for another reason, namely that “free competition is as unnatural as capitalism itself.” In absence of the state, commerce would be a matter of rent-seeking, a behavior only government regulation can prevent.

Paradoxically, the “freedom and prosperity of capitalism” are possible only “by denying people direct access to food and shelter.” In order to have this capitalist “freedom,” we must be alienated from our own nature. But if this is done, then “he breech created between us and our nature- and between us and nature in general – open a space previously unknown to human freedom and it is a form of civilization.”

Because of this fundamental alienation from nature, “ any individual that lives in the capitalist order is a fundamentally precarious being, of a radical frailty. It is the precariousness of the one who has no firm ground under his feet.”

A small quibble in the face of the vast economic ignorance/delusion on the part of some posters here;

“We do live in a democracy”

The U.S. is SUPPOSED to be a constitutional republic, NOT a mob rule democracy. The framers FEARED democracy, for obvious reasons. Leftists love “democracy”, however, and the endless polls and media spin that herd the mob.

May I ask what “framers” you are talking about. Alexander Hamilton, who did fear democracy, and wanted a strong central government with a National Bank (although I am sure you despise this about him), or are you speaking of Thomas Jefferson, who very much loved “mob rule” democracy and revolution? I have found that many people when speaking of what the framers intended have no idea what the political opinions of the “framers” were? They tend to speak about them as if they were all of one mind, which is not the case at all.

“Alexander Hamilton, who did fear democracy, and wanted a strong central government with a National Bank…”
The same Alexander Hamilton who stormed off from the Constitutional Convention, and advocated the same political system the colonies had revolted little more than a decade prior; the same Alexander Hamilton who desired that the federal government to spur the growth of industry, and large mercantillist companies supported by the National Bank? He didn’t want a strong federal government for the ends that you desire, instead he wanted a economic system much like the one we see today.

“…or are you speaking of Thomas Jefferson, who very much loved “mob rule” democracy and revolution?”
The same Thomas Jefferson who applauded the role that the self-sufficient yeoman farmer would have as a foundation for the new constitutional republic?

“I have found that many people when speaking of what the framers intended have no idea what the political opinions of the “framers” were?”
Sweet, sweet irony.

Sorry, if I offended you, mine was probably a badly conceived and/or phrased attempt at irony.

When the British were beaten down here (1783), at least in my state of NJ, about 1/3 of the population high-tailed it out of here, many to Canada. Franklin’s son was the Governor of the Colony, and he went to England. During Vietnam a bunch of folks emigrated to Canada. I know, so what?

BTW, I have been to Canada, Ontario and Quebec, and have known many very fine people from your country, both English and French speakers. So, I hope there are no hard feelings?

Also, I have been intrigued by the HRC in Canada, and how it has “gone after” different sorts of people, and the grounds cited for doing so, because it is rather contrary to our concept of “free speech” and “freedom of religion”, which are closely linked in the First Amendment. I see the efforts of the HRC as somewhat predictive of what we might expect to see down here, with the various groups that support “hate crimes” legislation. Such groups are very encouraged now with our current administration, which self-identifies as “activist”.

I’m an American, but not a jingoist. As a country we operate fine in our original republican form of government, as guaranteed by our Constitution, but we were never intended to be an Empire of the geo-political variety, and it doesn’t suit us or me.

“He is embracing a revisionist fringe economics.”
It’s funny, not a single economist who endorses the view in the article you linked to ever predicted this current downturn. So, they are as much revisionists as Novak is.

As far as the article, its pure unadulterated economic babble. First of all, is he seriously saying that Asian savings were responsible for the problem? In the traditional American rhetorical tool of if-all-else-fails-blame-another-country he is completely ignoring the fact that the Federal Reserve had pumped the American economy full of easy credit to the bursting point. Second of all, he completely ignores the role that the Federal Reserve had, he does not even mention the Federal Reserve once. Third of all, how can Fannie, and Freddie conceivably be clean from any blame when they were the driving force behind the housing bubble, especially in view of how many mortgages that they gave out have hitherto defaulted. Fourth of all, I love how he blames a “lax regulatory environment” for that is always the strategy of advocates of regulation cry out whenever their solutions fail (the fact that Bernie Madoff was closely tied to regulators himself makes the entire system a bad joke). Fifth of all, when you are seriously blaming a “culture of greed” for an economic crisis rather than giving a pure economic analysis of the situation your theories are terrible – “greed” is not an explanation, it is merely a naked emperor trying to cover himself with argumenta ad misericordiam. The fact that he does not give any attention to economists who predicted the crisis (why not mention to Peter Schiff, or the Ludwig von Mises Institute?) makes that article a disgrace.

“You must have missed the part about what I thought of Hamilton, sorry. I in no way support his ideas. Your post is a little lost on me, would you care to tell me what your point was.”
To call Hamilton a founding father like Jefferson is dishonest since Hamilton was not involved in the drafting of the constitution, and then I wanted to show how you implying that Hamilton agreed with you, and that Jefferson was a supported of mob rule was false.

Hamilton wrote the majority of the Federalist papers, Jefferson was in France during the time of the drafting of the constitution. Jefferson was a revolutionary who backed the radicals in France, and he did say that every country should have a revolution every 20 years to be healthy. I think you might need to brush up on your American History.

Why do I think nine Americans have heard of him? He does not worship Capitalism, that’s why. One would think that those who constantly write about economics would have read his work (“Ethics and the National Economy” is a good place to start)but I rarely, if ever, see him cited which, at least to me, calls into question all of the Catholicism and Capitalism Conflating going on out there.

Pesch, as a Catholic economist, necessarily rejects socialism and all forms of collectivism. He places private property — along with the family and the state — as one of the three pillars of the social order. At the same time, he rejects free-market capitalism, for from his examination of the nature of man and society, he is led to the idea of the mutual interdependence of all members of society. Thus, his system is called Solidarism — or the Solidaristic System of Human Work — which in outline will be familiar to all readers of the papal social encyclicals. For example, as both Leo XIII and Pesch point out, because capital and labor depend on each other, or, more precisely, since owners and workers depend on each other, there should not be any fundamental conflict between these different economic agents. And there is no reason to suppose that society will flourish best when each member tries only to advance his own economic welfare, any more than that the family maximizes its own happiness when each member thinks solely of his own interests.

John Quincy Adams, speaking on the occasion of The Jubilee of The Constitution, said we are a confederation (of states; Article IV Constitution).

With these qualifications, we may admit the same right as vested in the people of every state in the Union, with reference to the General Government, which was exercised by the people of the United Colonies, with reference to the Supreme head of the British empire, of which they formed a part – and under these limitations, have the people of each state in the Union a right to secede from the confederated Union itself.

Thus stands the RIGHT. But the indissoluble link of union between the people of the several states of this confederated nation, is after all, not in the right, but in the heart. If the day should ever come, (may Heaven avert it,) when the affections of the people of these states shall be alienated from each other; when the fraternal spirit shall give away to cold indifference, or collisions of interest shall fester into hatred, the bands of political association will not long hold together parties no longer attracted by the magnetism of conciliated interests and kindly sympathies; and far better will it be for the people of the disunited states, to part in friendship from each other, than to be held together by constraint. Then will be the time for reverting to the precedents which occurred at the formation and adoption of the Constitution, to form again a more perfect union, by dissolving that which could no longer bind, and to leave the separated parts to be reunited by the law of political gravitation to the center.

As Donald Livingston observes (“Chronicles” May 2009) he United States is not now and has never been a republic. It is a federation of states, each of which, in Article IV of the Constitution, is guaranteed a republican form of government. But a federation of republics is not itself a republic any more that the federation ofnations in the United Nations, or the European Union, is a nation.

“Hamilton wrote the majority of the Federalist papers, Jefferson was in France during the time of the drafting of the constitution.”
The Federalist Papers were written after the Constitution Convention in support of the Constitution, and had little influence outside of New York. Hamilton’s entire career as a founding father consists in his writing of the Federalist Papers, his tenure as Secretary of the Treasury, where he implemented many mercantilist policies that would become synonomous with American capitalism, but his influence here became more important as a foundation for the later Whigs, and Progressives, and then his two campaigns for president. It was really not that much activity compared to Jefferson .

“Jefferson was a revolutionary who backed the radicals in France, and he did say that every country should have a revolution every 20 years to be healthy.”
Jefferson realized that every government grows beyond its place, and in order to limit it a revolution once in a while might not be a bad idea. And as far as him being a revolutionary, most of the founding fathers, except those like Madison who came on the scene during in late 1780s, were revolutionaries.

Re Apology from MPM: No apology is necessary although I do appreciate the gesture and I confess I did mistake you for a gingoist.

It’s interesting to see how an Amerian might view the United Empire Loyalists who came up (mostly to Southern Ontario, I think)in the interim between the Revolutionary War and the War of 1812 during which many of them proved to be indifferent as to which side won. It was presumed from this that many, at least in the later period, had merely come up for the free land grants.

Bear in mind that not all of the Loyalists were English. Many were Pennsylvania Dutch (i.e. German) and George III was German, hence the land grants.

To be desccended from United Empire Loyalists is equivalent to having anscestors who came over on the Mayflower although Toronto at least, is very multi-cultural so the Loyalists don’t really mean much anymore. I think some of my anscestors were Loyalists.

I’m fascinated by the Loyalists because if you scratch through the mythology surrounding them you’re left with the fact that Southern Ontario was largely settled by refugees who collected the eqjuivalent of Welfare.

Like the Draft Dodgers of the 1960’s, the Loyalists had mixed motives in coming here. I think “high tailed it out of here” is perhaps an unfair generalization.

Though I encountered any number of Draft Dodgers I can only remember having a serious talk with one of them. He was a clean cut young man whose faith in his country had been totally shaken and he had come up here at considerable personal sacrifice.

As to the Human Rights Commissions, they are just as alien to our concepts of free speech And freedom of Religion not to mention the presumption of innocence as they are to yours. Such things as hate speech and unjust discrimination are wrong. I’ve seen photos taken about 80 years ago of storefronts in our city with “Help Wanted” signs that included the words “Catholics and Jews need not apply”. When I was young I got punched in the face by a stranger a bit older than me because I went to a Catholic school.

It is right to make such behaviour towards anyone illegal but any such laws need to be crafted very carefully.

Why do we put up with it?

Because most Canadians are unaware of it. Canadians as a whole, are more liberal than Americans and the HRC’s tend to go after relatively unknown conservatives.

OK, my last post on this thread. As far as I can determine, Mr. Novak is trying to spin Free Market Captialism as congruent with Catholicism and that, finally, the Catholic Church is getting it right (even though it makes factual errors).

. In CA, Novak writes, “the pope sees that the market is, above all, a social instrument” and that “market systems shed practical light on Christian truth and advance human welfare.” In Novak’s account, the pope also argues “that markets generate new and important kinds of community, while expressing the social nature of human beings in rich and complex ways.”

The editors of Caelum et Terra, in contrast, were part of an orthodox Catholic coalition which came together to challenge this interpretation. Fifteen editors and writers–including David L. Schindler of Communio, Fr. Ian Boyd and Stratford Caldecott of the Chesterton Review, and Michael O’Brien of Nazareth–affiliated with nine different periodicals signed and published in their own pages a full-page response titled “The Civilization of Love: The Pope’s Call to the West.” Their statement, admirable but–like Caelum et Terra itself–now seemingly forgotten, deserves to be quoted in full:
The collapse of international communism has destroyed one of the most obvious enemies of human freedom, but it has left the starving of the Third World in their misery, even while the moral anarchy of a mass popular culture prevails in the affluent West–destroying those “common things” (G. K. Chesterton) that lie at the root of social order and organic community. In the long run, communism itself may have had less power to destroy traditional morality and historic cultures than the disintegrative consumerism of the West.
And so, when Pope John Paul II criticizes the complacency of the developed nations, and looks to them to make “important changes in established life-styles, in order to limit the waste of environmental and human resources” (Centesimus Annus, n. 52), this is no mere “vestigial rhetorical fragment that somehow wandered into the text … notable chiefly for its incongruity with the argument that Pope is otherwise making” (as one leading neo-conservative theologian has asserted). The Pope is setting out one of the most fundamental requirements of the new evangelization.

The universal call to holiness, made concrete in the promotion of justice and leading towards a civilization of love, demands nothing less than a change of life-styles. The Pope goes so far as to question the “models of production and consumption” that dominate present-day economic theory, and even the “established structures of power which today govern societies” (ibid., n. 58). The need to respond to this call could not be more urgent. “Everyone should put his hand to the work which falls to his share, and that at once and straightaway, lest the evil which is already so great become through delay absolutely beyond remedy” (ibid., n. 56, citing Rerum Novarum).

No one wrote more persuasively against the neoconservatives’ tendentious interpretation of Centesimus Annus than did Daniel Nichols. Nichols first noted that American neoconservatives had chosen to interpret CA as “both a profound break with previous
Catholic social teaching and a ringing endorsement of the American economic system and contemporary capitalism in general.” He cited Novak’s remarkable assertion that the pope’s “vision of a free economy … is American in spirit and definition.” But this sort of reading was as ideological as had been previous attempts of the Catholic Left to appropriate papal teaching for their own political ends. John Paul II’s teaching on economics in CA was no different than that which he had promulgated in two previous encyclicals, Laborem Exercens and Sollicitudo Rei Socialis, observed Nichols. The pope, in fact, had even said in an interview on September 9, 1993, that the Church “has always distanced herself from capitalist ideology, holding it responsible for grave social injustices.”

By the way, today is the day (July 2) on which John Adams thought the United States of America should celebrate its independence from Britain. [see McCollough bio] My reading of U.S. history is also that we’re a confederation of states. It’s hard to remember that in this day and age.

Happy Independence Day a la John Adams!

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Food For Thought

“The legalization of the termination of pregnancy is none other than the authorization given to an adult, with the approval of an established law, to take the lives of children yet unborn and thus incapable of defending themselves. It is difficult to imagine a more unjust situation, and it is very difficult to speak of obsession in a matter such as this, where we are dealing with a fundamental imperative of every good conscience — the defense of the right to life of an innocent and defenseless human being.”

- St. John Paul II

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Should the US Bishops have us return to obligatory "meatless Fridays" during the whole year and not just during Lent?

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“And how we burned in the camps later, thinking: What would things have been like if every Security operative, when he went out at night to make an arrest, had been uncertain whether he would return alive and had to say good-bye to his family? Or if, during periods of mass arrests, as for example in Leningrad, when they arrested a quarter of the entire city, people had not simply sat there in their lairs, paling with terror at every bang of the downstairs door and at every step on the staircase, but had understood they had nothing left to lose and had boldly set up in the downstairs hall an ambush of half a dozen people with axes, hammers, pokers, or whatever else was at hand?... The Organs would very quickly have suffered a shortage of officers and transport and, notwithstanding all of Stalin's thirst, the cursed machine would have ground to a halt! If...if...We didn't love freedom enough. And even more – we had no awareness of the real situation.... We purely and simply deserved everything that happened afterward.”

- Aleksandr Solzhenitsyn

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Food For Thought

“Men are qualified for civil liberty in exact proportion to their disposition to put moral chains upon their own appetites. . . . Society cannot exist unless a controlling power upon will and appetite be placed somewhere; and the less of it there is within, the more there must be without. It is ordained in the eternal constitution of things, that men of intemperate minds cannot be free. Their passions forge their fetters.”

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